Business as usual – we’re operating remotely once again. During this time, please may we ask you visit the office for scheduled record drop off only.

On 24th September, Rishi Sunak unveiled the goverment’s plan to support businesses and protect jobs over the coming months.

It will be several days before the full details become clear and several weeks before the finer points are finalised.

We will continue to update you as and when we receive more information.

For now, here is a recap of the help available revised for any changes announced yesterday.

 

Bounce Back Loan Scheme (BBLS)

Key points:

  • Application date extended to 30th November 2020
  • Available to ALL small businesses and self employed
  • The government will provide lenders with a 100% guarantee on the value of the loan
  • No fees of interest to pay for the first 12 months
  • 2.5% a year interest after the first year
  • Finance terms have now been extended from 6 years to 10 years
  • Borrow between £2,000 and 25% of your business’ turnover
  • Maximum loan amount is £50,000

This option opens the door for those who would usually be unable to get a loan under normal circumstances due to inadequate security. You can apply simply by contacting one of the 11 accredited lenders. Most lenders have a dedicated page explaining the application process.

 

Coronavirus Business Interruption Loan Scheme (CBILS)

Key points:

  • Application date extended to 30th November 2020
  • The government will provide lenders with a 80% guarantee on the value of the loan
  • The government will also cover the first 12 months of interest payments and any arrangement fees (although many lenders have said they’ll waive these fees anyway)
  • Interest rates are set by the lender as opposed to the fixed 2.5% rate
  • Finance terms have now been extended from 6 years to 10 years
  • There are a few eligibility restrictions
  • You must have a borrowing proposal which would have been considered viable by the lender before the current pandemic

If you want to borrow more than is permitted under the Bounce Back Loan Scheme, then this could be a viable alternative. You can apply simply by contacting one of the 40+ accredited lenders. Most lenders have a dedicated page explaining the application process.

 

Coronavirus Self-employment Income Support Scheme (SEISS)

Key points:

  • First grant: March-June 80% of your monthly taxable trading profit for the period, backdated. Application date closed 13 July.
  • Second grant: July-September 70% of you monthly taxable trading profit for the period. Application date closes 19th October.
  • Extension announced to cover November 2020 to April 2021:-
    • The first grant will cover the 3 month period of November 2020- January 2021 and will be 20% of your monthly taxable trading profit for the period.
    • There is no information yet on the second grant to cover the 3 month period of February 2021 to April 2021.

Lets recap:

What is your Taxable trading profit? It is the figure on your Self Assessment tax calculation for profit from self employment.

What years will it be calculated from? If you filed your first return in 2019, then just 2019. If you filed your first return in 2018, it will be calculated on an average of the 2 years. If you filed a return in 2017, it will be calculated on an average of all 3 years.

You are filing a return in 2020 for the first time, are you eligible? Unfortunately not for this grant.

Is there a limit to my average profit based on the above? Yes, your average profit must be less and £50,000 per annum.

I have other income, how will it impact my eligibility? To qualify your profit from self employment must be over 50% of your total taxable income (this includes employment, property etc.)

Are the grants capped? Yes, the second grant is capped at £2,190 per month and the new grant will be capped at £1,875 in total (per 3 month period).

How will I receive the funds? It will be paid directly into your bank account in one instalment

Is it taxable? Yes, the grant is taxable and will need to be included when you prepare your self assessment tax return for the 2020/2021 tax year.

Will you be contacted by HMRC? Yes, HMRC will contact you if you are eligible for the scheme and invite you to apple online. If they haven’t, you can get more information and check your eligibility here – claim a grant through the Self-Employment Income Support Scheme.

 

Coronavirus Job Retention Scheme

Key points:

  • This scheme is due to end on 31 October
  • HMRC will cover 60% of the salary of employees, employers must top up the additional 20% as it is mandatory that the employee received 80% of their salary.
  • This is capped at £1,875

Lets recap:

  • Available to employees on the payroll at 29th February 2020
  • All UK businesses are eligible
  • Once furloughed, an employee was not allowed to do any work for the business.
  • Directors can be furloughed but other than statutory duties, they are not allowed to do any work for the company
  • Flexible furlough was introduced in July allowing employees to work part-time and to claim for hours they didn’t work
  • The furlough calculation is based on the higher of:
    • Same earning for the corresponding period last year
    • average monthly earning from 2019/20 tax year
    • the furlough period is a full calendar month

 

Job Retention Bonus

Employers will receive a one-off bonus of £1,000 for every furloughed employee (including directors) who are continuously employed to the end of January 2021. Employees must earn at least £520 (the National Insurance lower earning limit LEL) between 1 November 2020 and 31 January 2021 to be eligible.

 

Job Support Scheme

The government have announced the successor to the Coronavirus Job Retention Scheme. The scheme will open on 1 November 2020 and will run for 6 months.

The main points are as follows:

  • Employees must be on the payroll on or before 23 September to be eligible. This means that an RTI submission to HMRC on or before this date must have been made
  • Employees don’t have to have previously been furloughed
  • The employee must work at least 33% of their usual hours.
  • For every hour that an employee doesn’t work during the month, the government and the employer will each pay a third of the ‘usual wage’
  • The ‘usual wage’ will be calculated in the same way as it has been for the Job Retention Scheme

Here’s a working example:

  • Employee’s usual wage (as per the previous furlough calculation) is £600 per month
  • Employee must work at least 33% of their usual hours
  • In this scenario, the employee earns £198.00
  • Hours not worked are 67%
  • 67% of £600.00 is £402.00
  • Employer must pay two thirds of this to the employee ie £268.00
  • Employer will then receive a grant of £134.00 from the government (a third of £402.00)

More details will emerge over the coming days/weeks.

 

Self assessment tax payments deferred

As previously announced, payments on account due to HMRC by 31 July 2020 have been deferred until 31 January 2021.

The government have announced a further additional 12 month extension meaning payments deferred from July 2020, and those due in January 2021, will now be able to be paid over a twelve month period up to January 2022. No announcement has been made about whether interest will be charged but as this will be under the existing ‘Time to Pay’ arrangement, it is likely that it will be.

 

VAT payments deferred

The government initially announced a 3 month VAT payment holiday from 20 March to 30 June.

The government have now announced that instead of paying the full amount by the end of March 2021, you can make smaller payments up to the end of March 2022, interest free.

 

Mortgage holidays

UK banks are offering various relief measures to customers affected by coronavirus (this includes loss of income). The measures vary slightly from bank to bank but include repayment holidays on mortgages and loans of up to 3 months, increased credit card limits and the ability to withdraw funds from fixed savings accounts with no charges.

If you haven’t already claimed a mortgage holiday, you have until 31 October to do so. If you have already claimed, you can apply to extend this holiday by up to a further 3 months.

 

Business rates holiday for retail, hospitality or leisure businesses

For those of you who pay business rates in the eligible sectors, these have been scrapped for 12 months from 1 April 2020. You’ll need to get in touch with your local authority if you haven’t already done so.

 

Grant of up to £25,000

If you pay business rates and operate from premises with a rateable value between £15,000 and £51,000, then you are eligible for a non-repayable, taxable grant of up to £25,000. You should have been contacted by your local authority.

 

£10,000 cash grant

If you would usually pay business rates, but you’re claiming either ‘Small business rate relief’ or ‘Rural rate relief’, then you are eligible for a non-repayable, taxable £10,000 cash grant. You should have been contacted by your local authority.

 

Statutory Sick Pay (SSP)

If you employ staff who are off sick due to coronavirus (either illness or staying at home on government advice), the government will refund up to 14 days of SSP. This will be available from day one as opposed to day four.

 

Employment and Support Allowance (ESA)

For the self-employed, if you’re unable to work due to coronavirus (either illness or staying at home on government advice), and you don’t have savings or investments worth over £16,000, you can claim up to £73.10 per week from day one. If you’re in receipt of Working Tax Credits, you will still be eligible. To claim, follow this link and download the form.

 

Universal Credit

This benefit is available if you’re on a low income (employed or self-employed) and neither you nor your partner have savings or investments worth over £16,000.

The chancellor has announced an increase of £1,000 per annum (also applicable to Working Tax Credits) and suspension of the minimum income floor for the self-employed. This is the amount used to calculate your universal credit payment each month.

The standard rule is that if you earn more than the minimum income floor, you’ll get less universal credit, and if you earn less than the minimum income floor, you won’t get any extra money to make up the difference.