In normal circumstances, discussing matters of tax is rarely any business owner’s favourite subject. However, since March HMRC has been the single largest source of support available to businesses and the self-employed as coronavirus has increasingly impacted the UK economy.
The landscape of the national support measures has continued to develop with some staying in place, others being withdrawn and new measures being introduced. With the onset of local lockdowns, localised measures are also anticipated soon.
So what are the options in place now?
The national scheme is in wind down but may be revived on a localised basis.
This scheme is open to all businesses and will support the payment of wages to staff on their PAYE scheme who would otherwise have been made redundant due to the impact of COVID-19.
Staff must be “furloughed” or temporarily laid off for a minimum period of three weeks to be covered. This means that the staff cannot continue to work for the business and must be notified of their change in status, which remains subject to employment law.
The Coronavirus Job Retention Scheme will continue until the end of October covering 60% of wage costs (excluding employer NIC and pension costs) in its final month including pro-rate support for those working part time.
To incentivise and support the retention of furloughed employees a bonus of £1,000 can be claimed. To be eligible employees must have retained their role (and not have been served notice) at the end of January 2021.
You can find guidance on the Coronavirus Job Retention Bonus on the GOV.UK website by clicking here.
HMRC has announced that it will be reviewing claims made under the Job Retention Scheme and has outlined a process for repayment of overclaimed grants. Penalties for over claim extend to 100% (a doubling) of the over claimed amount and there is provision for directors to be made personally liable if the employer is unable to pay.
Review your claims under the Job Retention Scheme and notify HMRC of any errors by 20 October 2020 (or, if later, 90 days after you received the payment).
Put a plan in place for the return of furloughed employees; the new Job Support Scheme may assist you in retaining employees as demand levels return to your business. Take into account the Job Retention Bonus in any financial decision making.
The second instalment of this scheme is open to the self-employed and members of partnerships, providing a taxable grant worth 70% of personal trading profits up to a maximum of £6,570 for three months. This will be particularly relevant where a business uses subcontractors or freelancers as it will provide those suppliers with support whilst the business’ cash flow is tight.
To be eligible profit must make up more than half of the individuals taxable income and a self-assessment tax return for the 2018-19 tax year, must have been submitted by 23 April 2020. Trading must also have continued to the current tax year and ultimately have lost profits due to COVID-19.
The SEISS will apply to those with average taxable profits of less than £50,000 over the last three tax years or with trading profits less than £50,000 last year.
Claims under the second instalment of the scheme must be made by 19 October 2020.
For Income Tax Self-Assessment, payments on account due on the 31 July 2020 are now able to be deferred until 31 January 2021.
No business in the UK will need to pay their VAT returns that fall due between 20 March 2020 and 30 June 2020. This payment should be made by 31 March 2021 if you can. However, if you are unable to pay the amount due, interest-free time to pay (TTP) arrangements will be available to March 2022.
For any VAT which was due before 20 March 2020 or after 30 June 2020, PAYE/NIC or corporation tax, HMRC is offering support through its existing TTP arrangement scheme.
Should you miss a payment or expect to have challenges meeting your next payment, contact the HMRC’s helpline on 0300 200 3835.
Given the current uncertainty, it may be difficult to forecast when payments can be made and it may be necessary to request a long delay before commencing payments – especially if a business is mothballed.
This new scheme is a shift in focus from the Job Retention Scheme where now staff must be working at least a third of their usual hours. The scheme is even more complex than the job retention scheme and has more conditionality (particularly for larger employers).
When employees are working less than their usual hours the business and the government can each top-up wages under the scheme. This is under the principle of sharing the burden with the employee, employer, and government each baring a third of the cost.
Understanding the financial impact of the relatively limited support this new scheme provides will be key to appropriate decision making. We would also recommend that you take advice from HR and legal experts on the variations required to employee contracts.
Businesses with fewer than 250 employees (as of 28 February 2020) can reclaim SSP for up to 14 days per employee as long as their absence is due to COVID-19, be it because they have symptoms themselves, in their household, or have been advised to self-isolate by the NHS or another public health body.
The online system for employers to make a claim for SSP can be found here.
The coronavirus outbreak is likely to affect everyone’s day-to-day lives and the impact of this will vary from person to person. It’s important to take care of your mind and body, and to seek further support if you need it. Advice and information has been published on the GOV.UK website on how to look after your mental health and wellbeing during the coronavirus outbreak, along with an easy-to-read guide with useful tips.