HMRC is allowing your second self-assessment payment due on 31 July 2020 on account for the tax year 2019/20 to be deferred, due to the Covid-19 pandemic.

This means no interest or penalties will be charged on the deferred payment provided it is paid by 31 January 2021. All taxpayers within self-assessment can take advantage of the deferral option, not just those who are self-employed. There is no need to tell HMRC that the payment on account is being deferred.

Paying the deferred amount

Although you can still make the payment by 31 July 2020 as normal if you’re able to do so, deferral will be attractive if cash flow is a concern. The deferred amount can then be paid between 31 July 2020 and 31 January 2021:

Snowball effect

Although you do not need to pay the deferred payment until 31 January 2021, there is likely to be a snowball effect if it is not paid off by then. This is because that is also the deadline for paying any balancing amount for 2019/20, plus the first payment on account for 2020/21. If you make your accounts up to 31 March or 5 April, then these amounts will be based on profits for the year ended 31 March/5 April 2020, so mainly pre-COVID-19.

Even though payments on account for 2020/21 can be reduced to an estimate of the tax and NICs that will actually be due for this year, these might not be as low as you expect once council COVID-19 grants and amounts received under the self-employment income support scheme are included.

As things currently stand, HMRC will apply the usual interest, penalties and debt collection procedures for payments missed from 31 January 2021 onwards.

Reductions to income caused by Covid-19 could affect your tax bill in other ways:

If you have suffered a drop in income, it is worth checking with on which actions to take now and which can be left to come out in the final HMRC tax calculation.

HMRC guidance on options for paying a deferred payment on account is available.

In response to the Coronavirus, COVID-19, the government announced there would be support for small businesses, and businesses in the retail, hospitality and leisure sectors, delivered through the Small Business Grant Fund and the Retail, Leisure and Hospitality Grant Fund. This new discretionary fund is aimed at small and micro businesses who were not eligible for the Small Business Grant Fund or the Retail, Leisure and Hospitality Fund. Local authorities will be responsible for delivering the grants to eligible businesses.

How much funding will be provided to businesses?

Local authorities may disburse grants to the value of £25,000, £10,000 or any amount under £10,000. The value of the payment to be made to a business is at the discretion of the local authority. Grants under the Local Authority Discretionary Grants Fund are capped at £25,000. The next level payment under the Local Authority Discretionary Grants Fund is £10,000. Local authorities have discretion to make payments of any amount under £10,000. It will be for local authorities to adapt this approach to local circumstances, such as providing support for micro-businesses with fixed costs or support for businesses that are crucial for their local economies. It is expected that payments of under £10,000 may be appropriate in many cases. In taking decisions on the appropriate level of grant, local authorities may want to take into account the level of fixed costs faced by the business in question, the number of employees, whether businesses have had to close completely and are unable to trade online and the consequent scale of impact of COVID-19 losses. Bearing in mind the above, local authorities should set out clear criteria for determining the appropriate level of grant to give businesses clarity.

Who will benefit from these schemes?

These grants are primarily and predominantly aimed at:

• Small and micro businesses, as defined in Section 33 Part 2 of the Small Business, Enterprise and Employment Act 2015 and the Companies Act 2006.

• Businesses with relatively high ongoing fixed property-related costs

• Businesses which can demonstrate that they have suffered a significant fall in income due to the COVID-19 crisis

• Businesses which occupy property, or part of a property, with a rateable value or annual rent or annual mortgage payments below £51,000.

To be a small business, under the Companies Act 2006, a business must satisfy two or more of the following requirements in a year:

• Turnover: Not more than £10.2 million

• Balance sheet total: Not more than 5.1 million

• Number of employees: a headcount of staff of less than 50

To be a micro business, under the Companies Act 2006, a business must satisfy two or more of the following requirements:

• Turnover: Not more than £632,000

• Balance sheet total: Not more than £316,000

• Number of employees: a headcount of staff of not more than 10

The government want local authorities to exercise their local knowledge and discretion and recognise that economic need will vary across the country, so some national criteria for the funds are being set, but local authorities are allowed to determine which cases to support within those criteria. Local authorities are asked to prioritise the following types of businesses for grants from within this funding pot:

• Small businesses in shared offices or other flexible workspaces. Examples could include units in industrial parks, science parks and incubators which do not have their own business rates assessment;

• Regular market traders with fixed building costs, such as rent, who do not have their own business rates assessment;

• Bed & Breakfasts which pay Council Tax instead of business rates; and

• Charity properties in receipt of charitable business rates relief which would otherwise have been eligible for Small Business Rates Relief or Rural Rate Relief.

The list set out above is not intended to be exhaustive but is intended to guide local authorities as to the types of business that the government considers should be a priority for the scheme. Authorities should determine for themselves whether particular situations not listed are broadly similar in nature to those above and, if so, whether they should be eligible for grants from this discretionary fund.

Local authorities set out the scope of their discretionary grant scheme on their website, providing clear guidance on which types of business are being prioritised, as well as the rationale for the level of grant to be provided (either £25,000, £10,000 or less than £10,000).

Eligibility

This grant funding is for businesses that are not eligible for other support schemes. Businesses which are eligible for cash grants from any central government COVID related scheme (apart from SEISS) are ineligible for funding from the Discretionary Grants Fund. Such grant schemes include but are not limited to:

• Small Business Grant Fund

• Retail, Hospitality and Leisure Grant

• The Dairy Hardship Fund

Businesses who have applied for the Coronavirus Job Retention Scheme are eligible to apply for this scheme. Businesses who are eligible for the Self-Employed Income support scheme (SEISS) are eligible to apply for this scheme as well.

Only businesses which were trading on 11 March 2020 are eligible for this scheme. Companies that are in administration, are insolvent or where a striking-off notice has been made are not eligible for funding under this scheme.

Application

Local authorities are currently awaiting further guidance from the government on how these grants should be administered, but check your local authority website for details are you may be able to submit an application now. For example:

Barnsley: https://my.barnsley.gov.uk/form/apply-for-a-discretionary-business-support-grant/page-1

Sheffield: https://www.sheffield.gov.uk/home/your-city-council/coronavirus-support-for-business/sheffield-covid19-grant-scheme

Leeds: https://www.leeds.gov.uk/coronavirus/apply-for-a-discretionary-grant

The Chancellor has announced plans to extend the SEISS for those people whose trade continues to be, or is newly, adversely affected by COVID-19.

Eligible self-employed people will be able to claim a second and final SEISS grant in August; this will be a taxable grant worth 70% of their average monthly trading profits for three months, paid out in a single instalment and capped at £6,570 in total.

The eligibility criteria for the second grant will be the same as for the first grant. You do not need to have claimed the first grant to claim the second grant: for example, if your business has been adversely affected by COVID-19 more recently.

As with the first SEISS grant gbac cannot as agents apply for the grant on your behalf. We are, as always, here to help you and can carry out the eligibility check if required and also review the figures calculated by HMRC.

We will send further updates as soon as we have more information, but please do not hesitate to contact us if you have any questions.

The Chancellor has announced three changes to the job retention scheme:

1. From 1‌‌ July 2020, the scheme will be made more flexible to enable employers to bring previously furloughed employees back part time and still receive a grant for the time when they are not working.

2. From 1‌‌ August 2020, employers will have to start contributing to the wage costs of paying their furloughed staff and this employer contribution will gradually increase in September and October.

3. The scheme will close to new entrants from 30‌‌ June. This gives employers until 10 June to add any new employees to the scheme

Further information regarding each of these changes is detailed below.

1. Part time furloughing

From 1‌‌ July 2020, businesses using the scheme will have the flexibility to bring previously furloughed employees back to work part time, a month earlier than previously announced.

Employers will decide the hours and shift patterns their employees will work on their return and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as the business needs, with no minimum time that they can furlough staff for.

Any working hours arrangement agreed between a business and their employee must cover at least one week and be confirmed to the employee in writing.

2. Employer contributions

From August, the government grant provided through the job retention scheme will be slowly tapered.

3. Important dates

The scheme will close to new entrants from 30‌‌ June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30‌‌ June.

This means that the final date by which an employer can furlough an employee for the first time will be 10‌‌
June for the current three-week furlough period to be completed by 30‌‌ June. Employers will have until 31‌‌
July to make any claims in respect of the period to 30‌‌ June.

As always, GBAC – accountants in Barnsley – are here to support. Please do not hesitate to give us a call on 01226 298 298 if you have any questions. 

Our accountants in Leeds and accountants in Sheffield are happy to help too.

Since the Government announced that the UK would be placed under lockdown on 23rd March 2020, the financial impact that this would have on thousands of businesses and individuals was, understandably, a cause of concern for everyone up and down the country.

However, since this announcement the Government have pledged to support businesses and have implemented new measures to help them cope and remain operational throughout the Coronavirus outbreak.

Here we provide you with a round-up of the support, which is available to SME’s, self-employed and most recently, start-up businesses:

Employee Costs

Statutory Sick Pay Relief Package

SMEs will be able to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19.

The eligibility period for the scheme began on 13th March and the refund will cover up to two-weeks’ SSP per eligible employee who are either ill or have been told to self-isolate because of Coronavirus.

Coronavirus Job Retention Scheme

If you are struggling to maintain your current level of workforce due to the negative effect the impact of Coronavirus has had on your business, then you can decide to “furlough” employees and apply for a Government grant which covers 80% of their usual monthly wage costs, up to a total of £2,500 a month.

This scheme was initially hoped to be a temporary measure, but it has since been announced by the Chancellor, Rishi Sunak, that this will be extended until the end of October. From August, employers currently using the scheme will have more flexibility to bring their furloughed employees back part-time.

Follow the link for further details on the scheme: https://www.gov.uk/guidance/cl…

Rates support and grants

Small Support Grant Funds

The Government is providing additional funding for local authorities to support businesses that pay either little or no business rates because of Small Business Rate Relief (SBRR), Rural Rate Relief (RRR) and Tapered Relief.

This will be a one-off grant to eligible businesses to help meet ongoing costs during Coronavirus. No application is necessary, the local authority will contact you if you are eligible.

Under the Small Business Grant Fund (SBGF) all eligible businesses in England in receipt of either Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR) in the business rates system will be eligible for a payment of £10,000.

Under the Retail, Hospitality and Leisure Grant (RHLG) eligible businesses in England in receipt of the Expanded Retail Discount (which covers retail, hospitality and leisure) with a rateable value of less than £51,000 will be eligible for a cash grants of £10,000 or £25,000 per property.

Eligible businesses in these sectors with a property that has a rateable value of up to and including £15,000 will receive a grant of £10,000.

Eligible businesses in these sectors with a property that has a rateable value of over £15,000 and less than £51,000 will receive a grant of £25,000.

Businesses with a rateable value of £51,000 or over are not eligible for this scheme Businesses which are not ratepayers in the business rates system are not included in this scheme

Business Rates relief

Businesses in the retail, hospitality and leisure sectors in England will not have to pay business rates for the 2020 to 2021 tax year.

You are eligible if your property is a:

• shop

• restaurant, café, bar, or pub

• cinema or live music venue

• assembly or leisure property – for example, a sports club, a gym, or a spa

• hospitality property – for example, a hotel, a guest house, or self-catering accommodation

You do not need to take any action. Your local council will apply the discount automatically.

Bank and third-party finance

Small Business Bounce Back Loan

The Bounce Back loan scheme was launched on Monday 4th May and is aimed to help small and medium sized businesses borrow between £2,000 and £50,000.

The Government have announced that they will guarantee 100% of the loan with no fees, interest, or repayments during the first 12 months and is been provided through a network of accredited lenders.

Follow the link below for further details on how you can apply for the loan:

https://www.gov.uk/guidance/ap…

Coronavirus Business Interruption Loan Scheme (CBILS)

A temporary scheme which provides a wide range of business finance products such as term loans, overdrafts, invoice finance and asset finance facilities via the British Business Bank up to a value of £5m.

The Government have announced that they will cover the first 12 months of interest payments so smaller businesses will benefit from no upfront costs and lower initial repayments.

You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly and provide the finance needed in a timely manner.

Coronavirus Future Fund

The Future Fund will provide government loans to UK-based companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors.

These convertible loans may be a suitable option for businesses that rely on equity investment and are unable to access the Coronavirus Business Interruption Loan Scheme.

The scheme will be delivered in partnership with the British Business Bank.

You are eligible if your business:

• is based in the UK

• can attract the equivalent match funding from third-party private investors and institutions

• has previously raised at least £250,000 in equity investment from third-party investors in the last 5 years

Coronavirus Large Business Interruption Loan Scheme

The Coronavirus Large Business Interruption Loan Scheme (CLBILS) supports large businesses, with an annual turnover of over £45 million.

All viable businesses with turnover of more than £45 million per year can apply for up to £25 million of finance.

The scheme is available through a series of accredited lenders, which are listed on the British Business Bank website. The government provides lenders with an 80% guarantee on individual loans. This gives banks the confidence to lend to many more businesses which are impacted by coronavirus. Facilities backed by a guarantee under CLBILS are offered at commercial rates of interest.

This scheme allows lenders to support businesses that were viable before the coronavirus outbreak but now face significant cash flow difficulties that would otherwise make their business unviable in the short term.

Payment holidays for loans and mortgages

Businesses with existing loans and mortgages should contact their lender(s) to explore the possibility of a payment / mortgage holiday.

Support with your tax liabilities

HMRC: Time to Pay

Any business which may find themselves in financial upset with outstanding tax liabilities may be eligible to arrange a “Time to Pay” agreement with HMRC. This would allow businesses and individuals to pay off their debt in instalments over an agreed period; each decision is made on a case by case basis.

A dedicated helpline has been set up for this on 0800 0159 559.

HMRC: VAT Payments Deferral

The VAT payment deferral scheme has been made available for all businesses regardless of nature or size. The scheme runs from 20th March 2020 to 30th June 2020 and enables the business to defer any VAT liabilities which fall due within this period to be deferred until the end of the 2020/21 tax year.

This is an automatic offer and no application is necessary, however, companies that usually pay their VAT liabilities are been advised to contact their bank to cancel the direct debit if they are unable to pay. This needs to be done in enough time so that HMRC do not attempt to automatically collect payment on receipt of your VAT return.

All VAT returns should be submitted by their due date, as normal protocol.

Support for the Self Employed

Self Employed Income Support Scheme

Like the Job Retention Scheme, self-employed people who are eligible can apply directly to HMRC for a grant worth 80% of their average monthly trading profits over the past three years. The grant is to be capped at £7,500 and is thought to be one of the most generous support schemes announced by the Government in response to Coronavirus.

Individuals are eligible if their business has been adversely affected by coronavirus, they traded in the tax year 2019 to 2020, intend to continue trading, and they:

• earn at least half of their income through self-employment

• have trading profits of no more than £50,000 per year

• traded in the tax year 2018 to 2019 and submitted their self-assessment tax return on or before 23 April 2020 for that year

HMRC calculate the amount to be paid to each eligible claimant based on an average of the tax returns for 2016/17, 2017/18 and 2018/19.

Follow the link below to check if you are eligible for the scheme and complete your application:

https://www.gov.uk/guidance/cl…

Universal Credit

Universal Credit is a monthly payment to help with your living costs. You may be able to get it if you are on a low income, out of work or you cannot work.

HMRC time to pay

If you owe less than £10,000 you might be able to arrange to pay in instalments online.

Because of coronavirus (COVID-19), you can delay making your second payment on account due in July 2020. If you choose to delay, you will have until 31 January 2021 to pay it.

Call the Self-Assessment helpline if you have missed your payment date or you cannot use the online service (0300 200 3835). You do not need to contact HMRC if you have set up a payment plan online.

Staying COVID-19 Secure

Below are links to guidance which you may find useful to ensure that, when the time is right, you can safely reopen your office environment in accordance with Government guidelines and manage the risks of COVID-19.

Working safely during COVID-19 in offices and contact centres:

https://assets.publishing.serv…

Staying COVID-19 secure in 2020:

https://assets.publishing.serv…

The Bounce Back loan scheme which is set to launch on Monday 4th May 2020 is aimed to help small and medium-sized businesses to borrow between £2,000 and £50,000.

It has been announced that the Government will guarantee 100% of the loan with no fees, interest or repayments due during the first 12 months. Terms of up to 6 years can be agreed and the Government will work with lenders to agree a lower rate of interest for the remaining period of the loan. The scheme will be provided through a network of accredited lenders and in order to be eligible to apply for a loan, your business must meet the following criteria:

However, there are limits to the availability of the loan as businesses within the following sectors are not eligible to apply:

Note. You cannot apply for the Bounce Back Loan scheme if you are already claiming under the CBILS (Coronavirus Business Interruption Loan Scheme), however, if you have already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4th November 2020.

More information is expected to be released about the scheme shortly which we will publish in due course. However, if you have any concerns or questions regarding the support available for your business during these uncertain times, please don’t hesitate to get in touch with our team on 01226 298 298.

HMRC have confirmed that the online service for claiming funding for furloughed employees under the Coronavirus Job Retention Scheme is due to be launched on 20 April 2020

Making a claim

Applicants will be able access the system using their current government gateway login.

The following information will be required to make a claim:

Payment

We understand that the first claims will be paid 10 days after the portal opens with future claims paid within four to six days.

Further information

HMRC have indicated that they may retrospectively audit all aspects of the claim made.

Practical guidance on how to make claims via the portal is expected to be published this week to give employers the information required to enable claims to be made online without the need to contact HMRC.

If you have any queries or wish to speak to a member of our team to assist you with your claim, please call our office on 01226 298 298.

VAT

Income Tax

As always, if you have any queries about the above or wish to discuss anything with our team, please don’t hesitate to contact us on 01226 298 298. 

On the evening of March 26th 2020, the Government released further information on how a claim for wages costs through the scheme can be made. 

Full details of the guidance which has been published can be found on the GOV.uk website, link below.

https://www.gov.uk/guidance/cl…

As always, please do not hesitate to get in touch with a member of our gbac team on 01226 298 298 and we will be happy to discuss the guidance with you and any other concerns you may have during this unprecedented time.