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Covid-19 Resources

Covid-19 Tax and Accountancy Resources

A resource hub to guide your business through the impact of Covid-19

We have provided a collection of accountancy, tax and grant resources created specifically to help guide you on the latest Government updates and announcements surrounding business survival during Covid-19.

Coronavirus Business Interruption Loan Scheme – Large Businesses
This scheme helps medium and large sized businesses to access loans and other kinds of finance up to £200 million. The government guarantees 80% of the finance to the lender. Applications for this scheme are open until 31 March 2021.

If you’re a smaller business, you may be entitled to other government support.

Eligibility
You can apply for a loan if your business :

  • is based in the UK
  • has an annual turnover of over £45 million
  • did not receive support under the Bank of England’s COVID-19 Corporate Financing Facility (CCFF)

You need to show that:

  • your business would be viable were it not for the pandemic
  • Covid-19 affected your business
  • the loan will enable you to trade out of any short-term to medium-term difficulty resulting from coronavirus

If you’re borrowing more than £50 million you must agree to restrictions on dividend payments, senior pay and share buy-backs during the period of the loan. Check the eligibility requirements.

Who cannot apply:
Businesses from any sector can apply, except:

  • banks, insurers and reinsurers (but not insurance brokers)
  • building societies
  • public-sector bodies
  • state-funded primary and secondary schools

What you can apply for:

  • loans
  • revolving credit facilities (including overdrafts)
  • invoice finance
  • asset finance

A lender can provide up to 25% of your annual turnover. The maximum amount you can borrow is £200 million.

How long the loan is for:
Finance is available from 3 months to 3 years.

How to apply
There are 27 lenders taking part in the scheme including all the main retail banks. You should approach a suitable lender yourself via the lender’s website.

You’ll need to tell the lender:

  • the amount you’d like to borrow
  • what the money is for
  • how long you’d like to pay it back

Supporting Documents
You’ll need to provide documents that show you can afford to repay the loan.

These may include:

  • management accounts
  • cash flow forecast
  • business plan
  • historic accounts
  • details of assets

The documents you need will depend on the lender. A loan could still be an option even if you do not have everything listed here.

The lender will check that the loan is:

  • for a suitable business purpose
  • affordable for you
  • correct finance type type for your requirements

The lender will decide whether to offer you a loan or another type of finance. Your business will be responsible for repaying 100% of the amount you borrow.

Coronavirus Business Interruption Loan Scheme – Small to Medium Business

This scheme helps small and medium-sized businesses to access loans and other kinds of finance up to £5 million.

The government guarantees 80% of the finance to the lender and pays interest and any fees for the first 12 months.

31 March 2021 is when this scheme ends.

If you’re a larger business, you may be entitled to other government support.

Eligibility

You can apply for a loan if your business:

  • is based in the UK
  • has an annual turnover of up to £45 million

You need to show that your business:

  • would be viable were it not for the pandemic
  • has been adversely impacted by the coronavirus

If you want to borrow £30,000 or more, you also need to confirm that your business wasn’t classed as a business in difficulty on 31 December 2019.

Who cannot apply

Businesses from any sector can apply, except:

  • banks, insurers and reinsurers (but not insurance brokers)
  • public-sector bodies
  • state-funded primary and secondary schools

 

How long the loan is for

The maximum length of the facility depends on the type of finance you apply for and will be:

  • up to 3 years for overdrafts and invoice finance facilities
  • up to 6 years, for loans and asset finance facilities

How to apply

There are 117 lenders participating in the scheme including all the main retail banks. You should approach a suitable lender yourself via the lender’s website.

You’ll need to tell the lender:

  • the amount you’d like to borrow
  • what the money is for
  • how long you’d like to pay it back

Supporting Documents

You’ll need to provide documents that show you can afford to repay the loan.

These may include:

  • management accounts
  • cash flow forecast
  • business plan
  • historic accounts
  • details of assets

The documents required will vary from lender to lender and depend on how much you’re asking for. If you’re asking your existing lender for a small loan, the process may be automated and not require all of the documents.

The lender will check that the loan is:

  • for a suitable business purpose
  • affordable for you
  • the right type of finance for your needs

The lender will decide whether to offer you a loan or another type of finance and you’ll be responsible for repaying 100% of the amount borrowed.

Find a lender

Apply for a Coronavirus Bounce Back Loan

This scheme helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.

The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.

The scheme is open to applications until 31 March 2021.

If you already have a Bounce Back Loan but borrowed less than you were entitled to, you can top up your existing loan to your maximum amount. You must request the top-up by 31 March 2021.

If you need a larger loan, you may be entitled to other government support.

 

Eligibility

You can apply for a loan if your business:

  • is based in the UK
  • was established before 1 March 2020
  • has been adversely impacted by the coronavirus

If your business was classed as a business in difficulty on 31 December 2019 you’ll need to confirm that you’re complying with additional state aid restrictions.

 

Who cannot apply

Businesses from any sector can apply, except:

  • banks, insurers and reinsurers (but not insurance brokers)
  • public-sector bodies
  • state-funded primary and secondary schools

 

If you’re already claiming funding

You cannot apply if you’re already claiming under:

If you’ve already received a loan of up to £50,000 under one of these schemes you can transfer it into the Bounce Back Loan scheme. You have until 31 March 2021 to arrange this with your lender.

 

How long the loan is for

The length of the loan is 6 years, but you can repay early without paying a fee. No repayments will be due during the first 12 months.

Before your first repayment is due, your lender will contact you about further options to:

  • extend the term of your loan to 10 years
  • move to interest-only repayments for a period of 6 months (you can use this option up to 3 times)
  • pause your repayments for a period of 6 months if you have already made at least 6 repayments (you can use this option once)

 

How to apply

There are 29 lenders participating in the scheme including many of the main retail banks. You should approach a suitable lender yourself via the lender’s website.

The lender will ask you to fill in a short online application form and self-declare that you are eligible.

Then, the lender will decide whether to offer you a loan or another type of finance and you’ll be responsible for repaying 100% of the amount borrowed.

Find a lender

Coronavirus Job Retention Scheme (CJRS) – Extended
  • The Coronavirus Job Retention Scheme has been extended until 30 April 2021.
  • Claims for furlough days in December 2020 must be made by 14 January 2021.
  • You can no longer submit claims for claim periods ending on or before 31 October 2020.

If you cannot maintain your workforce because your operations have been affected by coronavirus (COVID-19), you can furlough employees and apply for a grant to cover a portion of their usual monthly wage costs where you record them as being on furlough.

The Coronavirus Job Retention Scheme has been extended until 30 April 2021. You can claim 80% of an employee’s usual salary for hours not worked, up to a maximum of £2,500 per month.

Employees who were employed on 30 October 2020 can be claimed for, as long as you have made a PAYE RTI submission to HMRC between the 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee. This may differ where you have made employees redundant, or they stopped working for you on or after 23 September 2020 and you have subsequently re-employed them.

All employers with a UK, Isle of Man or Channel Island bank account and UK PAYE schemes can claim the grant. You do not need to have previously claimed for an employee before the 30 October 2020 to claim.

Employers can furlough employees for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked.

You will need to pay for employer National Insurance contributions and pension costs. Find out more information on employer contributions to the Coronavirus Job Retention Scheme.

Further guidance, including on how to claim the extended CJRS support through an updated claims service, is expected to be published shortly, but for any other details regarding furlough FOLLOW THIS LINK

 

The Job Support Scheme

The commencement of the Job Support Scheme (JSS), which comprises JSS Open (for open business premises) and JSS Closed (for closed business premises), has been postponed until the existing CJRS ends. The JSS will then be introduced.

Covid-19: Guidance for Businesses & Self Employed

The Government has set out a package of temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by COVID-19.

For business in Scotland, Wales & N.Ireland, please select the relevant drop down option further down the page as some support packages differ depending on authorities.

Support Package Information:

BUSINESS FUNDING & SUPPORT

SELF EMPLOYED & SOLE TRADERS

Full details on all schemes for England can be found on the following government web page: FULL LIST OF FINANCIAL SUPPORT FOR BUSINESSES

Support for businesses in Scotland, Wales and Northern Ireland:

Local Restrictions Support Grant

The Government announced recently that further funding would be made available. The points below (issued via the gov.uk website) give some basic information, however all grant applications must be made via your Local Authority.

 

Support for businesses affected by coronavirus restrictions

England only.

 

Northumberland County Council:

All local funding information can be found via their relevant support page HERE

 

Scottish Borders Council:

The Scottish Government have issued slightly different funding schemes – further details can be found HERE.

Job Support Scheme (JSS)

The Job Support Scheme (JSS) will open on 1‌‌‌ ‌November and run for six months, until 30‌‌‌ ‌April 2021. Currently, the government has said it will review the terms of the scheme in January 2021. There are two variations to JSS – JSS Open and JSS Closed.

The UK government announced on 22nd October it will significantly increase the generosity and reach of its winter support schemes to ensure livelihoods and jobs across the UK continue to be protected in the difficult months to come, supporting jobs and helping to contain the virus.

In recognition of the challenging times ahead, the Chancellor said he would be increasing support through the existing Job Support and self-employed schemes.

 

JSS Open

JSS Open will provide support to businesses that are open where employees are working shorter hours due to reduced demand. Your employees will need to work at least 20% of their usual hours. You will continue to pay employees for the hours they work, and the UK government will pay a contribution of 61.67% of the usual pay for hours not worked, up to a maximum of £1,541.75 per month. You will pay 5% of the usual pay for hours not worked, up to a maximum of £125 per month, and can top this up further if you choose. This means employees should receive at least two thirds of their usual pay for hours not worked.

The caps are reduced according to the proportion of hours not worked. Further guidance on this will be available on GOV‌‌‌‌.UK shortly.

You will need to cover all employer National Insurance and pension contributions.

 

JSS Closed

JSS Closed will provide support to businesses whose premises are legally required to close as a direct result of coronavirus restrictions set by one of the four governments of the UK. This includes premises restricted to delivery or collection-only services from their premises, and those restricted to providing food and/or drinks outdoors.

For JSS Closed, the UK government will fund two thirds of employees’ usual wages for time not worked, up to a maximum of £2,083.33 per month. You will not be required to contribute, but you can top up the government’s contribution if you choose to. You will still need to cover all employer National Insurance and pension contributions.

You’ll be able to make your first JSS claim in arrears from 8‌‌‌ ‌December, for pay periods ending and paid in November. We’ll let you know more about how to make a claim by the end of this month.

Your employees will be able to check if you have made a Job Support Scheme claim on their behalf through their online Personal Tax Account. Employees can set up a Personal Tax Account on GOV‌‌‌‌.UK, by searching ‘Personal Tax Account: sign in or set up’

For more information see the Job Support Scheme Open Factsheet

Support for businesses through the Coronavirus Job Retention Scheme

If you cannot maintain your current workforce because your operations have been severely affected by coronavirus (COVID-19), you can furlough employees and apply for a grant that covers 80% of their usual 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.

 

The Coronavirus Job Retention Scheme is changing:

From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked. When claiming the CJRS grant for furloughed hours employers will need to report and claim for a minimum period of a week.

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 3 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, in order for the current 3 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.

Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June. Find out more information on how the Coronavirus Job Retention Scheme is changing.

***Further information will be updated as it is released***

 

Who Can Claim

You must have:

  • created and started a PAYE payroll scheme on or before 19th March 2020
  • have a Government Gateway (GG) ID and password – if you don’t already have a GG account, you can apply here, or by going to GOV.UK and searching for ‘HMRC services: sign in or register’
  • enrolled for PAYE online – this can take up to 10 days
  • a UK bank account

Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.

 

Apprentices

Apprentices can be furloughed in the same way as other employees and they can continue to train whilst furloughed.

However, you must pay your Apprentices at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time they spend training. This means you must cover any shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage.

Guidance is available for changes in apprenticeship learning arrangements because of COVID-19.

 

Public sector organisations

The government expects that the scheme will not be used by many public sector organisations, as most public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak.

Where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for staff costs.

Organisations who are receiving public funding specifically to provide services necessary to respond to COVID-19 are not expected to furlough staff.

In a small number of cases, for example where organisations are not primarily funded by the government and whose staff cannot be redeployed to assist with the coronavirus response, the scheme may be appropriate for some staff.

 

Individuals

Individuals can furlough employees such as nannies provided they pay them through PAYE and they were on their payroll on, or before, 19th March 2020.

 

Administrators

Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme. However, we would expect an administrator would only access the scheme if there is a reasonable likelihood of rehiring the workers. For instance, this could be as a result of an administration and pursuit of a sale of the business.

 

Employees You Can Claim For

You can only claim for furloughed employees that were on your PAYE payroll on or before 19th March 2020.

Employees hired after 19th March 2020 cannot be furloughed and claimed for in accordance with this scheme.

Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts. Foreign nationals are eligible to be furloughed.

To be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation. This includes providing services or generating revenue. Employers are free to consider allocating any critical business tasks to staff that are not furloughed. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.

 

If you made employees redundant or they stopped working for you after 19th March 2020

If you made employees redundant, or they stopped working for you on or after 19th March 2020, you can re-employ them, put them on furlough and claim for their wages through the scheme. This is at the discretion of the employer.

 

If your employees are working reduced hours

If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme.

 

If your employee is on unpaid leave

You can only claim for employees that started unpaid leave after 19th March 2020.

 

If your employee is self-isolating or on sick leave

If you’re employee is on sick leave or self-isolating, they’ll be able to get Statutory Sick Pay.

You cannot claim for employees while they’re getting Statutory Sick Pay, but they can be furloughed and claimed for once they are no longer receiving Statutory Sick Pay.

 

Shielding Employees

You can claim for furloughed employees who are shielding in line with public health guidance (or need to stay home with someone who is shielding) if they are unable to work from home and you would otherwise have to make them redundant.

 

Employees with caring responsibilities

Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed. For example, employees that need to look after children can be furloughed.

 

If your employee has more than one job

If your employee has more than one employer they can be furloughed for each job. Each job is separate, and the cap applies to each employer individually.

Employees can be furloughed in one job and receive a furloughed payment but continue working for another employer and receive their normal wages.

 

If your employee is on a fixed term contract

Employees on fixed term contracts can be furloughed. Their contracts can be renewed or extended during the furlough period without breaking the terms of the scheme. Where a fixed term employee’s contract ends because it is not extended or renewed you will no longer be able claim grant for them.

 

Eligible individuals who are not employees

As well as employees, the grant can be claimed for any of the following groups, if they are paid via PAYE:

  • office holders (including company directors)
  • salaried members of Limited Liability Partnerships (LLPs)
  • agency workers (including those employed by umbrella companies)
  • limb (b) workers

The guidance below sets out specific considerations for those individuals who are paid via PAYE, but who are not necessarily employees in employment law. Unless explicitly set out below, all other guidance is applicable to these cases, and should be followed.

 

Office Holders

Office holders can be furloughed and receive support through this scheme. The furlough, and any ongoing payment during furlough, will need to be agreed between the office holder and the party who operates PAYE on the income they receive for holding their office. Where the office holder is a company director or member of a Limited Liability Partnership (LLP), the furlough arrangements should be adopted formally as a decision of the company or LLP.

 

Company Directors

As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.

Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.

This also applies to salaried individuals who are directors of their own personal service company (PSC).

 

Salaried Members of Limited Liability Partnerships (LLPs)

Members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through this scheme.

The rights and duties of a member of an LLP are set out in an LLP agreement and in the absence of an agreement, default provisions in the LLP Act 2000, based upon company and partnership law. Such an agreement may include separate agreement between the LLP and an individual member setting out the terms applicable to that member’s relationship with the LLP.

To furlough a member, the terms of the LLP agreement (or any such agreement between the LLP and the member) may need to be varied by a formal decision of the LLP, for example to reflect the fact that the member will perform no work in the LLP for the period of furlough, and the effect of this on their remuneration from the LLP. For an LLP member who is treated as being employed by the LLP (in accordance with s863A of ITTOIA 2005), the reference salary for this scheme is the LLP member’s profit allocation, excluding any amounts which are determined by the LLP member’s performance, or the overall performance of the LLP.

 

Agency Workers (including those employed by umbrella companies)

Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.

Furlough should be agreed between the agency, as the deemed employer, and the worker, though it would be advised to discuss the need to furlough with any end clients involved. As with employees, agency workers should perform no work for, through or on behalf of the agency that has furloughed them while they are furloughed, including for the agency’s clients.

Where an agency supplies clients with workers who are employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.

 

Limb (b) Workers

Where Limb (b) Workers are paid through PAYE, they can be furloughed and receive support through this scheme.

Those who pay tax on their trading profits through Income Tax Self-Assessment, may instead be eligible for the Self-Employed Income Support Scheme (SEISS), announced by the Chancellor on 26 March 2020.

Read more information on the Self-Employed Income Support Scheme, including eligibility criteria and how to claim.

 

Contingent workers in the public sector

The Cabinet Office has issued guidance on how payments to suppliers of contingent workers impacted by COVID-19 should be dealt with where the party receiving the contingent worker’s services is a Central Government Department, an Executive Agency of a Central Government Department or a Non-Departmental Public Body.

Read more information on contingent workers impacted by COVID-19. This guidance applies to agency workers paid through PAYE, as well as those paid through umbrella companies on PAYE and off-payroll workers supplying their services through a Personal Service Company (PSC).

 

If your employee does volunteer work

A furloughed employee can take part in volunteer work, if it does not provide services to or generate revenue for, or on behalf of your organisation. Your organisation can agree to find furloughed employees new work or volunteering opportunities whilst on furlough if this is in line with public health guidance.

 

If your employee undertakes training

Furloughed employees can engage in training, as long as in undertaking the training the employee does not provide services to, or generate revenue for, or on behalf of their organisation. Furloughed employees should be encouraged to undertake training.

Where training is undertaken by furloughed employees, at the request of their employer, they are entitled to be paid at least their appropriate national minimum wage for this time. In most cases, the furlough payment of 80% of an employee’s regular wage, up to the value of £2,500, will provide sufficient monies to cover these training hours. However, where the time spent training attracts a minimum wage entitlement in excess of the furlough payment, employers will need to pay the additional wages (see National Minimum Wage Section for more details).

 

If your employee is on maternity leave, adoption leave, paternity leave or shared parental leave

The normal rules for maternity and other forms of parental leave and pay apply.

You can claim through the scheme for enhanced (earnings related) contractual pay for employees who qualify for either:

  • maternity pay
  • adoption pay
  • paternity pay
  • shared parental pay

 

 

Agreeing to Furlough Workers

Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. A record of this communication must be kept for five years.

You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.

 

How Much Can You Claim

You’ll need to claim for:

  • 80% of your employees’ wages (even for employee’s on National Minimum Wage) – up to a maximum of £2,500. Do not claim for the worker’s previous salary.
  • minimum automatic enrolment employer pension contributions on the subsidised wage

You can choose to top up your employee’s salary, but you do not have to. Employees must not work or provide any services for the business while furloughed, even if they receive a top-up salary.

Grants will be prorated if your employee is only furloughed for part of a pay period.

Claims should be started from the date that the employee finishes work and starts furlough, not when the decision is made, or when they written to confirming their furloughed status.

The way you work out your employees’ wages is different depending on what type of contract they’re on, and when they started work.

 

Full or part time employees on a salary

Claim for the 80% of the employee’s salary, as of 19th March 2020, before tax.

 

Employees whose pay varies

If the employee has been employed for 12 months or more, you can claim the highest of either the:

  • same month’s earning from the previous year
  • average monthly earnings for the 2019-2020 tax year

If the employee has been employed for less than 12 months, claim for 80% of their average monthly earnings since they started work.

If the employee only started in February 2020, work out a pro-rata for their earnings so far, and claim for 80%.

 

Employer National Insurance and Pension Contributions

You’ll still need to pay employer National Insurance and pension contributions on behalf of your furloughed employees, and you can claim for these too.

You cannot claim for:

  • additional National Insurance or pension contributions you make because you chose to top up your employee’s salary
  • any pension contributions you make that are above the mandatory employer contribution

Past Overtime, Fees, Commission, Bonuses and non-cash payments

You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.

 

Benefits in Kind and Salary Sacrifice Schemes

The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind. Similarly, benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in the reference salary. Where the employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.

Normally, an employee cannot switch freely out of a salary sacrifice scheme unless there is a life event. HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.

 

Apprenticeship Levy and Student Loans

Both the Apprenticeship Levy and Student Loans should continue to be paid as usual. Grants from the Job Retention Scheme do not cover these.

 

National Minimum Wage

Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW)/ Apprentices Minimum Wage (AMW) for the hours they are working or treated as working under minimum wage rules.

This means that furloughed workers who are not working can be paid the lower of 80% of their salary or £2,500 even if, based on their usual working hours, this would be below their appropriate minimum wage. However, time spent training is treated as working time for the purposes of the minimum wage calculations and must be paid at the appropriate minimum wage, taking into account the increase in minimum wage rates from 1 April 2020. As such, employers will need to ensure that the furlough payment provides sufficient monies to cover these training hours. Where the furlough payment is less than the appropriate minimum wage entitlement for the training hours, the employer will need to pay the additional wages to ensure at least the appropriate minimum wage is paid for 100% of the training time.

Where a furloughed worker is paid close to minimum wage levels and asked to complete training courses for a substantial majority of their usual working time employers are recommended to seek independent advice or contact Acas.

 

 

What You Will Need to Make a Claim

Employers should discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.

To claim, you will need:

  • your ePAYE reference number
  • the number of employees being furloughed
  • the claim period (start and end date)
  • amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
  • your bank account number and sort code
  • your contact name
  • your phone number

You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim. 

 

Claim

You should make your claim using the amounts in your payroll – either shortly before or during running payroll. Claims can be backdated until the 1 March where employees have already been furloughed.

If appropriate, worker’s wages should be reduced to 80% of their salary within your payroll before they are paid. This adjustment will not be made by HMRC.

Minimum furlough periods
 
Any employees you place on furlough must be furloughed for a minimum period of 3 consecutive weeks. When they return to work, they must be taken off furlough. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.

 

What you’ll need

To make a claim, you will need:

  • to be registered for PAYE online
  • your UK bank account number and sort code (only provide bank account details where a BACS payment can be accepted)
  • the billing address on your bank account (this is the address on your bank statements)
  • your employer PAYE scheme reference number
  • the number of employees being furloughed
  • each employee’s National Insurance number (you will need to search for their number if you do not have it or contact HMRC if your employee does not have a number)
  • each employee’s payroll or employee number (optional)
  • the start date and end date of the claim
  • the full amount you’re claiming for including employer National Insurance contributions and employer minimum pension contributions
  • your phone number
  • contact name

You also need to provide either:

  • your name (or the employer’s name if you’re an agent)
  • your Corporation Tax unique taxpayer reference
  • your Self Assessment unique taxpayer reference
  • your company registration number

 

Using an agent to do PAYE online

If you use an agent who is authorised to do PAYE online for you, they will be able to claim on your behalf.

If you would like to use an agent, but do not have one authorised to do PAYE online for you, you can do that by accessing your HMRC online services and selecting ‘Manage Account’.

You must be enrolled in PAYE online for employers to do this and will need to ask your agent for their agent ID. Your agent can get this from their HMRC online service for agents by selecting ‘authorise client.’

You can also use this service to remove authorisation from your agent if you do not want it to continue after they have submitted your claim(s).

If an agent makes a claim on your behalf you will need to tell them which bank account you would like the grant to be paid into. You must only provide bank details where a BACS payment can be accepted.

 

If you’re putting 100 or more employees on furlough

If you’re claiming for 100 or more furloughed employees, you’ll need to upload a file containing the following for each employee:

  • full name
  • National Insurance number
  • payroll number (optional)
  • furlough start date
  • furlough end date (if known)
  • full amount claimed

You’ll need ensure that you:

  • provide only the employee information requested here – if you provide more or less information than required, you may risk delaying your payment and/or be asked to provide the information again
  • submit one line per employee for the whole period
  • do not break up the calculation into multiple periods within the claim
  • do not split data by contract type
  • upload your file as an .xls, .xlsx, .csv or .ods

 

How to Claim

You’ll need the Government Gateway user ID and password you got when you registered for PAYE online.

If you do not finish your claim in one session, you can save a draft. You must complete your claim within 7 days of starting it.

Online services may be slow during busy times. Check if there are any problems with this service. 

After You’ve Claimed

HMRC will check your claim, and if you’re eligible, pay it to you by BACS to a UK bank account.

You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted.

If you have already made a claim

Please retain all records and calculations for your claims, in case we need to contact you about them. Provided your claim is made in accordance with HMRC’s published guidance, you can expect to receive the funds six working days after your application. Please do not contact us before this time.

HMRC will check claims made through the scheme and will act to protect public money against anyone who makes a claim using dishonest or fraudulent information.

 

When the government ends the scheme

When the government ends the scheme, you must make a decision, depending on your circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy).

HMRC will process all claims made before the scheme ends. 

 

 

When Your Employees Are On Furlough

You cannot ask your employee to do any work that:

  • makes money for your organisation
  • provides services for your organisation

They can take part in volunteer work or training.

 

Employee taxes

Your employees will still pay the taxes they normally pay out of their wages.

This includes pension contributions (both employer contributions and automatic contributions from the employee), unless the employee has opted out or stopped saving into their pension.

 

Employee rights

Employees still have the same rights at work, including:

  • Statutory Sick Pay
  • maternity and other parental rights
  • rights against unfair dismissal
  • redundancy payments

Grants cannot be used to substitute redundancy payments. HMRC will continue to monitor businesses after the scheme has closed.

 

Working for a different employer

If contractually allowed, your employees are permitted to work for another employer whilst you have placed them on furlough.

For any employer that takes on a new employee, the new employer should ensure they complete the starter checklist form correctly. If the employee is furloughed from another employment, they should complete Statement C.

 

Tax Treatment of the Coronavirus Job Retention Grant

Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.

Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

Job Retention Bonus Scheme

Employers who retain staff for three months after the furlough scheme ends will receive £1,000 government ‘bonus’ for each employee, the Chancellor has announced.

One of the main purposes of the Coronavirus Job Retention Scheme (CJRS) has been to support continued employment rather than face the prospect of mass redundancy.

In his Summer Statement, the Chancellor confirmed that the government is introducing a new Coronavirus Job Retention bonus to reward and incentivise employers who continue to employ their furloughed employees through to the end of January 2021.

The bonus will be:

  • a one-off payment of £1,000,
  • to UK employers,
  • for every furloughed employee who remains continuously employed through to 31 January 2021.

Employees must earn above the National Insurance lower earnings limit (£520 per month) on average between 31 October 2020 when the CJRS ends and the end of January 2021.

The bonus payments will be made from February 2021.

Although a modest sum, this will undoubtedly be useful, coming at a time when those businesses which have deferred tax debts begin to work out how to pay these. For example, self assessment taxes due at the end of January (by the unincorporated business owner) and VAT at the end of March.

Further detail about the CJR bonus scheme will be announced by the end of July.

Extension of the Job Retention Bonus Scheme

Chancellor Rishi Sunak has extended the Coronavirus Job Retention Scheme (CJRS) until the end of April 2021.

Businesses adversely affected by the coronavirus (COVID-19) can make use of the CJRS until the end of April, with the government continuing to pay 80% of employees’ salaries for hours not worked. Employers will only be required to pay wages, national insurance contributions (NICs) and pensions for hours worked, and NICs and pensions for hours not worked.

Additionally, Mr Sunak stated that he is extending COVID-19 business loan schemes until the end of March 2021. Businesses will be given until the end of March to access the Bounce Back Loan Scheme (BBLS), Coronavirus Business Interruption Loan Scheme (CBILS) and the Coronavirus Large Business Interruption Loan Scheme (CLBILS). These schemes had been due to close at the end of January.

The Chancellor also confirmed that the 2021 Budget will be delivered on 3 March 2021 and will outline the next phase of the government’s plan to combat COVID-19 and protect jobs.

The Chancellor said:

‘Our package of support for businesses and workers continues to be one of the most generous and effective in the world – helping our economy recover and protecting livelihoods across the country.

‘We know the premium businesses place on certainty, so it is right that we enable them to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support.’

Internet link: GOV.UK news

Furlough Scheme Extended

On 5 November, Chancellor Rishi Sunak announced that as part of the new national lockdown the Coronavirus Job Retention Scheme (CJRS) has been extended until the end of March 2021. This announcement updates the Prime Minister’s previous announcement on 31 October that the CJRS would be extended for a month until December.

The scheme has also reverted to its original level of support. Furloughed employees will receive 80% of salary for hours not worked and businesses asked only to cover national insurance and employer pension contributions.

The CJRS was due to have ended on 31 October after being scaled back to cover 60% of salaries during that month.

Chancellor Rishi Sunak said that the scheme will retain the flexible element and furloughed employees will receive 80% of their current salary for hours not worked, up to a maximum of £2,500.

A statement from the Treasury also confirmed that the Job Support Scheme (JSS), which had been due to launch on 1 November has now been postponed, and will not start until the CJRS has closed.

Chancellor Rishi Sunak said:

‘I’ve always said I would do whatever it takes to protect jobs and livelihoods across the UK – and that has meant adapting our support as the path of the virus has changed.

‘It’s clear the economic effects are much longer lasting for businesses than the duration of any restrictions, which is why we have decided to go further with our support.

‘Extending furlough and increasing our support for the self-employed will protect millions of jobs and give people and businesses the certainty they need over what will be a difficult winter.’

Internet links: GOV.UK news and GOV.UK factsheet

Self Employed Income Support Scheme

The Chancellor has announced an extension to the grant scheme covering November to April. Some information has been published regarding the first part (Nov-Jan), however the level of support for the second part (Feb-Apr) is yet to e confirmed.

The policy paper for the scheme extension scheme can be found HERE

A dedicated guidance page will soon be published on the gov.uk website.

The following information relates to the original SEISS scheme, which closed on 20th October 2020.

 

Who can claim

You can claim if you’re a self-employed individual or a member of a partnership and:

  • you traded in the tax year 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
  • you traded in the tax year 2019 to 2020
  • you intend to continue to trade in the tax year 2020 to 2021
  • you carry on a trade which has been adversely affected by coronavirus

Your business could be adversely affected by coronavirus if, for example:

  • you’re unable to work because you:
    • are shielding
    • are self-isolating
    • are on sick leave because of coronavirus
    • have caring responsibilities because of coronavirus
  • you’ve had to scale down or temporarily stop trading because:
    • your supply chain has been interrupted
    • you have fewer or no customers or clients
    • your staff are unable to come in to work

You should not claim the grant if you’re above the state aid limits or operating a trade through a trust.

To work out your eligibility we will first look at your 2018 to 2019 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.

If you’re not eligible based on the 2018 to 2019 Self Assessment tax return, we will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.

Find out how we will work out your eligibility including if we have to use other years.

Grants under the Self-Employment Income Support Scheme are not counted as ‘access to public funds’, and you can claim the grant on all categories of work visa.

Your tax agent or adviser cannot make the claim for you. You must make the claim yourself. If you use an agent you should contact them if you need any help or support.

 

How different circumstances affect the scheme

Check if your circumstances affect your eligibility, for the following: 

  • if your return is late, amended or under enquiry
  • if you’re a member of a partnership
  • if you’re on or took parental leave
  • if you have loans covered by the loan charge
  • if you claim averaging relief
  • if you’re non-resident or chose the remittance basis
  • if you’re above the state aid limits

Check if you’re eligible to claim

You can use the online tool to find out if you’re eligible to make a claim. Your tax agent or adviser can also use the online tool to check your eligibility on your behalf.

You’ll need your:

Online services may be slow during busy times. Find out if there are any problems with this service.

CHECK NOW

 

If you’re eligible

We’ll tell you the date you’ll be able to make a claim from and ask you to add your contact details. We will use these to remind you when the online service will be available.

If you’re not eligible

If we’ve told you that you’re not eligible to make a claim, you can ask HMRC to review this after you’ve used the online tool. If you want to do this at a later time, you’ll be able to use the online tool more than once.

Find other help and support you can get.

 

How much you’ll get

You’ll get a taxable grant based on your average trading profit over the 3 tax years:

  • 2016 to 2017
  • 2017 to 2018
  • 2018 to 2019

We will work out your average trading profit by adding together your total trading profits or losses for the 3 tax years, then we will divide by 3.

The grant will be 80% of your average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500 altogether. The online service will tell you how we’ve worked the grant out.

The grant amount we work out for you will be paid directly into your bank account, in one instalment.

Find out how we will work out your average trading profits including if you have not traded for all 3 years.

 

How to claim

The online service is now available. MAKE YOUR CLAIM from the date we gave you when you checked your eligibility.

 

When you make your claim

You’ll only need your:

  • Self Assessment UTR – if you do not have this find out how to get your lost UTR
  • National Insurance number – if you do not have this find out how to get your lost National Insurance number
  • Government Gateway user ID and password – if you do not have a user ID, you can create one when you check your eligibility online
  • bank account number and sort code you want us to pay the grant into (only provide bank account details where a Bacs payment can be accepted)

You’ll have to confirm to HMRC that your business has been adversely affected by coronavirus.

If you claim the grant HMRC will treat this as confirmation you’re below the state aid limits.

HMRC will check claims and take appropriate action to withhold or recover payments found to be dishonest or inaccurate.

 

After you’ve claimed

Once you’ve submitted your claim, you will be told straight away if your grant is approved. We will pay the grant into your bank account within 6 working days.

You must keep a copy of all records in line with normal self-employment record keeping requirements, including:

  • the amount claimed
  • the claim reference number for your records
  • evidence that your business has been adversely affected by coronavirus

You will need to report the grant:

  • on your Self Assessment tax return
  • as self-employed income for any Universal Credit claims
  • as self-employed income and that you’re working 16 hours a week for any tax credits claims

***If you receive texts, calls or emails claiming to be from HMRC, offering financial help or a tax refund and asking you to click on a link or to give personal information, it is a scam. You should email it to phishing@hmrc.gov.uk and then delete it – HMRC WILL NEVER INCLUDE A LINK FOR YOU TO CLICK ON IN THEIR MESSAGES OR EMAILS

Self-Employed: Guidance & Assistance during Covid-19

The government will issue a taxable grant of 80% of their monthly profit, averaged over the last 3 years. This will be capped at £2500 and will be paid for 3 months, or longer if necessary. This will be called the Coronavirus Self-employment Income Support Scheme

Self employed workers will be able to receive this grant and work at the same time to ensure the continuity of their business.

 

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 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.

If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.

HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.

 

How much you’ll get:

You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):

  • 2016 to 2017
  • 2017 to 2018
  • 2018 to 2019

To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount.

It will be up to a maximum of £2,500 per month for 3 months.

We’ll pay the grant directly into your bank account, in one instalment.

How to 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.

Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.

You can apply for Universal credits in the meantime and request an advanced payment to aid cash flow in the meantime.

***You will access this scheme only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.***

 

After you’ve applied:

Once HMRC has received your claim and you are eligible for the grant, we will contact you to tell you how much you will get and the payment details.

If you claim tax credits you’ll need to include the grant in your claim as income

 

Support for businesses who are paying sick pay to employees – The online service you’ll use to reclaim SSP will open on 26th May 2020

The Coronavirus Statutory Sick Pay Rebate Scheme will repay employers the SSP paid to current or former employees.

The repayment will cover up to 2 weeks starting from the first qualifying day of sickness, if an employee is unable to work because they either:

  • have coronavirus (COVID-19) symptoms

  • cannot work because they are self-isolating because someone they live with has symptoms

  • are shielding and have a letter from the NHS or a GP telling them to stay at home for at least 12 weeks

You can claim for periods of sickness starting on or after:

  • 13 March 2020 – if your employee had coronavirus or the symptoms or is self-isolating because someone they live with has symptoms

  • 16 April 2020 – if your employee was shielding because of coronavirus

The weekly rate was £94.25 before 6 April 2020 and is now £95.85. If you’re an employer who pays more than the weekly rate of SSP you can only claim up to the weekly rate paid.

Use the SSP calculator to work out the actual amount.

Employees do not have to give you a doctor’s fit note for you to make a claim. But you can ask them to give you either:

  • an isolation note from NHS 111 – if they are self-isolating and cannot work because of coronavirus

  • the NHS or GP letter telling them to stay at home for at least 12 weeks because they’re at high risk of severe illness from coronavirus

Who can use the scheme

You can use the scheme as an employer if:

  • you’re claiming for an employee who’s eligible for sick pay due to coronavirus

  • you have a PAYE payroll scheme that was created and started on or before 28 February 2020

  • you had fewer than 250 employees on 28 February 2020

You can claim back from both the Coronavirus Job Retention Scheme and the Coronavirus Statutory Sick Pay Rebate Scheme for the same employee but not for the same period of time for that employee.

Your claim amount should not take you above the state aid limits under the EU Commission temporary framework. This is when combined with other aid received under the framework. The maximum level of state aid that a business may receive is €800,000. There is a lower maximum for agriculture at €100,000 and aquaculture and fisheries at €120,000.

The scheme covers all types of employment contracts, including:

  • full-time employees

  • part-time employees

  • employees on agency contracts

  • employees on flexible or zero-hour contracts

  • fixed term contracts (until the date their contract ends)

We will let you know when the scheme will end.

Connected companies and charities

Connected companies and charities can also use the scheme if their total combined number of PAYE employees was fewer than 250 on the 28 February 2020.

 

Get ready to claim

The online service you’ll use to reclaim Statutory Sick Pay (SSP) will be available from 26th May 2020.

To use the online service you will need the Government Gateway user ID you got when you registered for PAYE Online. If you did not register online you will need to enrol for the PAYE Online service.

Find your lost Government Gateway user ID if you do not have it.

If you use an agent who is authorised to do PAYE online for you, they will be able to claim on your behalf.

If you’re unable to claim online an alternative way to claim will be available. We will update this page with more information soon.

 

What you’ll need:

  • your employer PAYE scheme reference number

  • contact name and phone number of someone we can contact if we have queries

  • UK bank or building society details (only provide bank account details where a Bacs payment can be accepted)

  • the total amount of coronavirus SSP you have paid to your employees for the claim period – this should not exceed the weekly rate that is set

  • the number of employees you are claiming for

  • the start date and end date of the claim period

You can claim for multiple pay periods and employees at the same time. The start date of your claim is the start date of the earliest pay period you’re claiming for. The end date of your claim is the end date of the most recent pay period you’re claiming.

 

Records you must keep

You must keep records of SSP that you’ve paid and want to claim back from HMRC.

You must keep the following records for 3 years after the date you receive the payment for your claim:

  • the dates the employee was off sick

  • which of those dates were qualifying days

  • the reason they said they were off work – if they had symptoms, someone they lived with had symptoms or they were shielding

  • the employee’s National Insurance number

You can choose how you keep records of your employees’ sickness absence. HMRC may need to see these records if there’s a dispute over payment of SSP.

 

VAT: reduced rate for hospitality, holiday accommodation and attractions

If you’re a VAT registered business, check if you can temporarily reduce the rate of VAT on supplies relating to hospitality, accommodation, or admission to certain attractions.

As announced at budget 2021, the government will be legislating to:

  • extend the temporary reduced rate of VAT of 5% until 30 September 2021
  • prepare for a new rate of 12.5% from 1 October 2021 to 31 March 2022

The supplies to which the temporary reduced rates will apply remain the same.

The government made an announcement on 8 July 2020 allowing VAT registered businesses to apply a temporary 5% reduced rate of VAT to certain supplies relating to:

  • hospitality
  • hotel and holiday accommodation
  • admissions to certain attractions

The temporary reduced rate will apply to supplies that are made between 15 July 2020 and 31 March 2021.

These changes are being brought in as an urgent response to the coronavirus (COVID-19) pandemic to support businesses severely affected by forced closures and social distancing measures.

 

Hospitality

If you supply food and non-alcoholic beverages for consumption on your premises, for example, a restaurant, café or pub, you’re currently required to charge VAT at the standard rate of 20%. However, when you make these supplies between 15 July 2020 and 31 March 2021 you will only need to charge 5%.

You will also be able to charge the reduced rate of VAT on your supplies of hot takeaway food and hot takeaway non-alcoholic drinks.

More information about how these changes apply to your business can be found in Catering, takeaway food (VAT Notice 709/1).

 

Hotel and holiday accommodation

You will also benefit from the temporary reduced rate if you:

  • supply sleeping accommodation in a hotel or similar establishment
  • make certain supplies of holiday accommodation
  • charge fees for caravan pitches and associated facilities
  • charge fees for tent pitches or camping facilities

More information about how these changes apply to your business can be found in Hotels and holiday accommodation (VAT Notice 709/3).

 

Admission to certain attractions

If you charge a fee for admission to certain attractions where the supplies are currently standard rated, you will only need to charge the reduced rate of VAT between 15 July 2020 and 31 March 2021.

However, if the fee you charge for admission is currently exempt that will take precedence and your supplies will not qualify for the reduced rate.

More information about how these changes apply to your business can be found in VAT: Admission charges to attractions.

 

The Flat Rate Scheme

If you are a small business and use the use the Flat Rate Scheme to simplify your VAT calculations you should be aware that certain percentages have been reduced in line with the introduction of the temporary reduced rate of VAT.

More information can be found in VAT Flat Rate Scheme.

 

The Tour Operators Margin Scheme

If you are a business that buys in and resells travel, accommodation and certain other services, and you act in your own name, you may operate the Tour Operators Margin Scheme to simplify your calculations.

Further information about how the introduction of the temporary reduced rate of VAT will affect your calculations can be found in Tour Operators Margin Scheme (VAT Notice 709/5).

 

Accounting for supplies that straddle the temporary reduced rate

In most cases, you will simply account for VAT at 5% for supplies made between 15 July 2020 and 31 March 2021. However, there may be situations where you receive payments or issue invoices before 15 July 2020 for supplies that take place on or after 15 July 2020.

More information about this can be found in sections 30.7.4 to 30.9.2 of VAT guide (VAT Notice 700).

 

Retail schemes

Catering businesses using retail schemes may have to alter their accounting systems for the period 15 July 2020 to 31 March 2021.

If you have a bespoke retail scheme agreement, you should review it and if you think an alteration is needed, contact your large business Customer Compliance Manager, or if you are not a large business customer you should contact Kamran.Hussain@hmrc.gov.uk.

 

Catering businesses operating the catering adaption

If you have a turnover of between £1 million and £130 million and using a catering adaption method previously agreed with HMRC you may alter the scheme without prior agreement for the period providing the calculation gives a fair and reasonable result. You must then revert back to your previous scheme.

You should keep the records of how you altered the scheme as part of your business records.

To find out more about catering adaption, read section 7 of in Notice 727.

 

Caterers using the direct calculation scheme

If all your sales are at the reduced rate then the reduced rate will apply to your daily gross takings during the period.

If you have mixed supplies and your till is not programmed to account for different rates then you may adopt the principles of the direct calculation scheme, if appropriate, to the standard rated goods. Otherwise you should make a fair and reasonable apportionment and retain your workings as part of your business records.

 

Self Employment Income Support Scheme (SEISS) – 5th Grant Update

A fifth grant covering May 2021 to September 2021 will be open to claims from late July 2021.

The grant is taxable and will be paid out in a single instalment.

Guidance for claiming the grant will be available by the end of June 2021.

 

1. Who can claim

To be eligible for the grant you must be a self-employed individual or a member of a partnership.

1.1 When you must have traded

You must have traded in the tax years:

  • 2019 to 2020 and submitted your tax return on or before 2 March 2021
  • 2020 to 2021

You must either:

  • be currently trading but are impacted by reduced demand due to coronavirus
  • have been trading but are temporarily unable to do so due to coronavirus

1.2 Your tax returns

To work out your eligibility for the fifth grant, we’ll first look at your 2019 to 2020 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.

If you’re not eligible based on your 2019 to 2020 tax return, we’ll then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020.

1.3 Deciding if you can claim

You must declare that:

  • you intend to continue to trade
  • you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus from May 2021 to September 2021

You must keep evidence that shows how your business has been impacted by coronavirus resulting in less business activity than otherwise expected.

HMRC expects you to make an honest assessment about whether you reasonably believe your business will have a significant reduction in profits.

 

2. How the fifth grant is different

The amount of the fifth grant will be determined by how much your turnover has been reduced in the year April 2020 to April 2021.

We’ll provide more information and support by the end of June 2021 to help you work out how your turnover was affected. 

2.1 How much you’ll get

Turnover reductionHow much you’ll getMaximum grant
30% or more80% of 3 months’ average trading profits£7,500
less than 30%30% of 3 months’ average trading profits£2,850

 

3. When you can claim

The online claims service for the fifth grant will be available from late July 2021.

If you’re eligible based on your tax returns, HMRC will contact you in mid-July 2021 to give you a date that you can make your claim from.

A fifth grant covering May 2021 to September 2021 will be open to claims from late July 2021.

The grant is taxable and will be paid out in a single instalment.

Guidance for claiming the grant will be available by the end of June 2021.

 

 

Check if you can claim a grant through the Self-Employment Income Support Scheme

HMRC is advising the self employed that the Self-Employment Income Support Scheme (SEISS) has been extended. Taxpayers who were not eligible for the first and second grant will not be eligible for the third.

To make a claim for the third grant the taxpayer’s business must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021, which they reasonably believe will have a significant reduction in their profits.

The third taxable grant is worth 80% of a taxpayer’s average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total.

The online service to claim the third grant is open. Taxpayers should make their claim from the date HMRC give taxpayers either by email, letter or within the service. Eligible taxpayers must claim the third grant on or before 29 January 2021.

The grant does not need to be repaid, but will be subject to Income Tax and self-employed National Insurance and must be reported on the taxpayer’s 2020 to 2021 Self Assessment tax return. Taxpayers must keep evidence to support their claim.

Internet link: GOV.UK guidance

 

COVID – Deferring VAT payments: If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to:

  • defer the payment until a later date
  • pay the VAT due as normal

HMRC will not charge interest or penalties on any amount deferred as a result of the Chancellor’s announcement.

 

VAT payments you can defer:

  • quarterly and monthly VAT returns’ payments for the periods ending in February, March and April
  • payments on account due between 20 March 2020 and 30 June 2020
  • annual accounting advance payments due between 20 March 2020 and 30 June 2020

The deferral does not cover payments for VAT MOSS or import VAT.

 

VAT repayments and returns

HMRC will continue to process VAT reclaims and refunds as normal and most repayments are paid within 5 working days.

Repayments will not be offset against any deferred VAT, but they will be offset against existing debts.

You can apply online to move to monthly returns to improve your cashflow if you’re in a repayment position.

 

How deferring VAT affects payments on account:

If you defer a payment on account between 20 March 2020 and 30 June 2020 but the balancing payment is outside of these dates, the amount you must pay is the balancing payment less any deferred payments. Deferring payments will not create a repayment.

You will still need to submit your VAT returns to HMRC on time.

 

If you choose to defer paying your VAT

If you choose to defer your VAT payment as a result of coronavirus, you must pay the VAT due on or before 31 March 2021 – GUIDANCE UPDATED 25th SEPTEMBER 2020

You do not need to tell HMRC that you’re deferring your VAT payment.

 

Payments made by Direct Debit

If you normally pay by Direct Debit you should cancel your Direct Debit through your bank as soon as possible so that HMRC will not automatically collect any VAT due. You can cancel online if you’re registered for online banking.

 

After the VAT deferral ends

VAT payments that are due after the end of the deferral period will need to be paid as normal.

 

How to get help

Time to pay arrangements are available to all businesses and individuals who are in temporary financial distress as a result of coronavirus. Time to pay arrangements that started before 20 March 2020 should still be paid.

If you’re struggling to pay your tax bill on time, or you’re experiencing financial difficulties you can contact HMRC’s Time to Pay service.

 

Get help online

Use HMRC’s digital assistant to find more information about the coronavirus support schemes.

You can also contact the HMRC coronavirus helpline for help and advice.

 

Self-employment and Universal Credit:

Universal Credit is a monthly payment to help with your living costs. You may be able to get it if you’re on a low income or out of work.

If you live in Northern Ireland, go to Universal Credit in Northern Ireland.

Find out if you’re eligible for Universal Credit.

 

Providing information about your earnings:

Everyone claiming Universal Credit needs to report their self-employed earnings at the end of each monthly assessment period. This includes company directors, even those paying themselves by PAYE.

You’ll need to report payments into and out of your business in the assessment period. This includes:

  • total amount your business received
  • how much your business spent on different types of expenses, such as travel costs, stock, equipment and tools, clothing and office costs
  • how much tax and National Insurance you paid
  • any money you paid into a pension

 

What type of work counts for Universal Credit:

All work is taken into consideration for Universal Credit. If you’re expected to look for and be available for work, then it needs to be identified whether you’re ‘gainfully self-employed’.

Gainful self-employment means that:

  • your main employment is self-employment
  • you have self-employed earnings
  • your work is organised, developed, regular and in expectation of profit

You must provide evidence about your business and earnings to your work coach, for example your:

  • tax returns, accounts and any business plan
  • Unique Taxpayer Reference (UTR), if you’re registered for Self Assessment
  • customer and supplier lists, receipts and invoices
  • marketing materials

If you’re gainfully self-employed you’re exempt from job search responsibilities and can concentrate on growing your business and earnings.

If you’re not gainfully self-employed, you’ll need to look for other work. You still have to report any earnings from your self-employment. You can ask to be reassessed in the future.

 

How your Universal Credit payment is worked out:

If you’re gainfully self-employed, your Universal Credit payment may be calculated using an assumed level of earnings, called a Minimum Income Floor.

It’s based on what an employed person on minimum wage would expect to earn in similar circumstances.

If you earn more than this, then your Universal Credit amount is based on your actual earnings.

If you earn less, the Minimum Income Floor is used to work out how much you can get. You may need to look for additional work to top up your income.

If you want to know how coronavirus (COVID-19) affects the Minimum Income Floor, you can read the latest information about coronavirus and Universal Credit.

 

If you’re both self-employed and employed:

Your Universal Credit payment will be worked out using your combined earnings or any applicable Minimum Income Floor, whichever is higher.

 

If you’re newly self-employed:

If you’re within 12 months of starting your business, you may be eligible for a start up period of up to 12 months.

During your start up period your monthly earnings are used to work out your Universal Credit and the Minimum Income Floor doesn’t apply. You’ll also receive support from a work coach who’s trained to work with the self-employed.

You’ll need to attend quarterly appointments with your Work Coach, providing evidence to show that you’re still gainfully self-employed and actively taking steps to build your business.

You’re only entitled to one start up period, unless it has been more than 5 years since your previous one, and you’ve started a completely different type of self-employment.

 

Reporting changes in your circumstances:

You’ll need to report any change in circumstances, for example if you:

  • close your business
  • start a different kind of business
  • take a permanent job
  • are no longer able to work

Depending on the change, your gainful self-employment may need to be reassessed.

COVID – Time to Pay Service: Support for businesses paying tax:  If you cannot pay because of coronavirus (COVID-19)

You may be able to pay your Self Assessment tax in monthly instalments. This includes any delayed (deferred) ‘payments on account’ that were due in July 2020, if you did not pay them at the time.

If you’re getting or planning to apply for Bereavement Support Payment, Maternity Allowance or Employment and Support Allowance, contact HMRC before applying to pay your tax bill in instalments. Your benefits payments might be affected if you change how you pay your Self Assessment.

Contact the HMRC coronavirus (COVID-19) helpline if you cannot pay any other tax bills because of coronavirus.

If you’re self-employed

If your business has been affected by coronavirus (COVID-19), you may be able to claim a grant through the Self-Employment Income Support Scheme.

If you cannot pay your Self Assessment tax bill

You can set up a payment plan online to spread the cost of your latest Self Assessment bill if:

  • you owe £30,000 or less
  • you do not have any other payment plans or debts with HMRC
  • your tax returns are up to date
  • it’s less than 60 days after the payment deadline

You do not need to contact HMRC if you set up a payment plan.

Call the Self Assessment helpline if you’re not eligible for a payment plan or cannot use the online service.

Self Assessment Payment Helpline

Telephone: 0300 200 3822
Monday to Friday, 8am to 6pm (closed on bank holidays)
Find out about call charges

If you cannot pay other taxes

You might be able to set up a Time to Pay Arrangement with HMRC if you’re unable to pay any other taxes in full. This lets you spread the cost of your tax bill by paying what you owe in instalments.

How you do this depends on whether you’ve received a payment demand.

If you’ve received a payment demand, like a tax bill or a letter threatening you with legal action, call the HMRC office that sent you the letter.

If you’ve not received a bill or letter, call the Payment Support Service (PSS).

Payment Support Service
Telephone: 0300 200 3835
Monday to Friday, 8am to 6pm (closed on bank holidays)
Find out about call charges

Nominated partners in business partnerships can negotiate a Time to Pay Arrangement with HMRC on behalf of the partnership or individual partners.

Accountancy and Tax News and Updates

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