Last updated Tuesday 2 June 2020
Here is a summary of the reliefs announced by the Government so far. We will continue to update this page, our Social Media feeds and also circulate email newsletter briefings as information is released to us.
We’ve arranged the various reliefs below by income status (i.e. self-employed, business owner, employee, individual) but please do read through them all – as more than one relief may apply to your individual circumstances. For example; if you’re self-employed or run a business you may be eligible for: reimbursement of a proportion of your normal worker payroll costs if you have to send your staff home due to lack of work, 70-80% of your average profits from the last 3 tax years, apply for a £2,000-£50,000 BounceBack loan, defer your VAT liabilities for almost 12 months, business rates relief, increased tax credits or a new Universal Credits claim, a mortgage holiday, deferred 31 July interim Self Assessment payment AND a Time To Pay arrangement with HMRC to spread your due tax liabilities.
Another important note (and then we’ll let you dive into the detail below), is that if you’re experiencing a lull in your business activity or you’re isolated at home now, we would strongly encourage you to focus on getting your business and personal income records and finances up to date. Many of the reliefs available will rely on the most up to date figures you can provide, so it will be worth using any down-time wisely (as well as giving you something productive to focus on during these troubled times).
Home-owners, renters, landlords
Mortgages – Lenders to provide mortgage payment holidays of at least 3 months for those facing finance issues as a result of coronavirus. Contact your mortgage provider directly to discuss.
Renters / Landlords – Government have announced they will bring forward emergency legislation preventing renters who fall behind on their rent from being evicted. Housing benefit is being boosted to help renters (and in turn landlords) so that it covers at least 30% of the market rent in the local area. This can be applied for using the Universal Credit contact details below. Landlords are able to apply for mortgage payments holidays, to help support their tenants.
Cash grants for self-employed – cash grant of up to 70-80% of your average trading profits, with a cap of £2,190-2,500 per month.
The first payments were made in May 2020 covering the three months March to May 2020. If you haven’t yet made a claim and you’re eligible and want to claim the first grant you must make your claim on or before 13 July 2020. After that the scheme is closed to you!
On 29 May 2020, the Chancellor announced the extension of this scheme for a further (final) three-month period covering June, July and August 2020. For this second grant, the payment will be reduced to 70% and is capped at £2,190. The claim system will be open for this second grant in August.
You are eligible for the grant:-
- if your self-employment income makes up the majority of your total income,
- if you completed a 2019 Self Assessment Tax Return AND
- if you had 2019 trading profits of less than £50,00 AND
- you are continuing to trade now (or trying to at least!)
Average profits are calculated using your 2016/17, 2017/18 and 2018/19 figures, or just 2018/19 if you only commenced trading recently. We can easily provide this information to you if we prepared your Returns.
Most generously, if you can continue your trade outside of the ‘lockdown’ restrictions, then you can do so and still claim the grant. There is no requirement to cease work altogether, as with the Job Retention Scheme for furloughed workers under the PAYE system.
HMRC have now released their online eligibility which checks your eligibility to the claim AND provides you with the date when you can apply from. Applications are staggered to smooth demand on their system. Please see our detailed step-by-step guide on the application process, including how to set up a Personal Tax Account.
Once the form is processed and checked, HMRC pay directly into your bank account 6 working days after the application is submitted.
To further assist with cashflow, the Government have made extra reliefs available including mortgage holidays, Universal Credit applications (which are being fast-tracked so you receive an upfront payment within days) and the BounceBack Loan scheme. All detailed elsewhere on this page.
Defer your Self Assessment liability – all self employed people who submit Self Assessment and would normally be required to make an interim payment on 31 July 2020 – you now have until 31 January 2021 to do so. No specific application to HMRC is necessary for this, and no interest or penalties will be charged by HMRC for the 6 months deferral.
Universal Credit / Working Tax Credit Both the Universal Credit and Working Tax Credit element annual allowances have been increased by £1,000 per year for the next 12 months. If you’re self-employed and directly affected by COVID-19, the ‘minimum income floor’ concept for Universal Credits has been temporarily relaxed – which effectively means you will be able to claim Universal Credit at a rate equivalent to Statutory Sick Pay £94.25 per week. Also remember if you make a self-employed loss say this month, DWP will take that as £NIL and also carry forward that loss against your next month’s positive income. We will update here when the application process for this is clarified next week.
Even if you’re not self-employed and / or directly affected by COVID-19, you still may be eligible for an increase to your existing Universal Credit or the Working Tax Credits element, or to make a new claim. Its worth contacting DWP on 0800 328 5644 or use your online account.
Spread your Personal Tax liabilities – all businesses in financial distress, and with outstanding Self Assessment liabilities, can contact HMRC to discuss a Time To Pay arrangement – this is where settlement of your liabilities are spread over a reasonable period after the normal payment deadline. Speak to us first and we can advise you about contacting HMRC’s dedicated COVID-19 Time To Pay helpline on 0800 0159 559 to discuss an arrangement.
Defer your VAT liabilities – all VAT registered UK businesses are eligible to defer their VAT liability payments between 20 March 2020 and 30 June 2020. No specific application to HMRC is necessary to defer payment after the due date, however VAT Returns will still have to be filed on time. Businesses will have until 5 April 2021 to settle up. If the business is in a VAT refund position, these will be paid promptly by HMRC are normal.
Spread your Business tax liabilities – all businesses in financial distress, and with outstanding or due Corporation Tax liabilities, can contact HMRC to discuss a Time To Pay arrangement – this is where settlement of your liabilities are spread over a reasonable period after the normal payment deadline. Speak to us first and we can advise you about contacting HMRC’s dedicated COVID-19 Time To Pay helpline on 0800 0159 559 to discuss an arrangement.
Pubs and restaurants – whilst the government has ordered you close, you can still provide a delivery or take-out service, and you can do so without applying for change of use under planning regulations. English retail, hospitality, leisure and now nurseries businesses – you will enjoy a 12 month holiday from business rates for the 2020 to 2021 tax year. English retail, hospitality and leisure businesses operating from smaller premises – a £25,000 grant will be provided, if your business property has a rateable value between £15,000 and £51,000. Any other business paying little or no business rates but with business premises will receive a small business grant of £10,000 to help with their ongoing business costs. More detailed guidance (and Government funding) will be issued to and by each local authority in early April. You should be directly contacted by your local authority – you do not need to apply.
Small businesses who are employers
Wages Reimbursement – Job Retention Scheme – All UK employers are eligible for the Job Retention scheme. HMRC will reimburse a generous proportion of the wage costs (so including Employers NI and Employers Pension costs) of those workers who you are genuinely unable to temporarily provide work for (who are ‘furloughed’), up to a cap per month. Its important to recognise this is a grant from HMRC, not a loan.
On 29 May 2020, the Chancellor announced details of CJRS (mark II) which runs to October 2020. The initial scheme ran to June and was extended to July. The Chancellor announced that any newly furloughed employees must be enrolled into the scheme by 10 June 2020. After that, the scheme is closed to new entrants. The scheme introduces from July the ability for an employer to take furloughed employees back into work part-time and yet still be furloughed for part of the week. Hopefully, this will provide some flexibility once businesses restart.
Individual firms will decide the hours and shift patterns their employees will work on their return, so they can decide on the best approach for them – and will be responsible for paying their wages while in work. Also (from August) employers will be asked to cover ‘a modest’ part of the cost of the furlough scheme.
• For August employers will continue to claim 80% of wages up to a cap of £2,500 per employee but will not be able to reclaim the Employers NIC and Pension costs associated with the furloughed salaries.
• For September the government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions plus 10% of the wages to make up 80% total, up to a cap of £2,500.
• For October the government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions plus 20% of the wages to make up 80% total, up to a cap of £2,500.
Hanley & Co have helped over 100 clients successfully obtain furlough claim reimbursements over the past few months. Please call Gina or Dean to discuss the implications of these recent changes.
Sadly, we also have some experience in offering clients advice on considering staff redundancies. We hope the new measures will minimise these enquiries – but we are here to help! Please call Dean Logan at any time.
The ICAEW understands single director companies and agency workers are eligible for the scheme, as long as genuinely there is no work is undertaken during the furloughed period.
You must prepare a letter to each worker advising them of their furloughed status (which is a variation of their employment contract) and offering to pay either 80% of their wages, or advising you will be topping up to 100% full pay. You must get their written agreement to this. We hope to be provided with draft wording for such letters in due course. If the employee refuses to accept the change in status or the 80% pay offer, then redundancy proceedings can commence in accordance with employment law.
The employees must undertake absolutely no work for the business during a furloughed period. The furloughed period and reimbursement claim can be backdated to 1 March 2020 (if that was genuinely the timing). We understand that furloughed periods may begin and end, for example as furloughed staff return to work to cover for someone who is taken ill. We also understand there may be provision for circumstances where shift sharing between employees is undertaken for example in nursery or school settings.
The relevant wages to be used in the calculation will likely be taken as an average of the previous 12 month period, or less for a new employee. Specific guidance is expected for oddities such as seasonal workers or those on maternity leave, where perhaps the wages earned over the same season last year or pre-maternity period will be used.
HMRC have an excellent portal and application form for us to claim this reimbursement on your behalf. Please contact us immediately if you have any workers you need to temporarily send home, so that we can make the applications.
Reclaim Sick Pay for employees – employers can now reclaim up to 2 weeks worth of Statutory Sick Pay (SSP) paid to employees, with a COVID-19 sickness absence. Additionally, the SSP eligible period will now start on the first day of absence – NOT the fourth day. Employees do not need to give you a GP fit note but you should, as always, maintain records of staff absences and payments of SSP. We can help trigger the SSP and reclaim if we already run your payroll, or provide guidance if you run your own. The Government is working to set up a prompt repayment mechanism for this SSP reclaim. Additionally, employers should be able to reclaim expenditure for any employee who has claimed SSP as a result of COVID-19.
Extra help for small businesses
Loans (12 months interest free) – the Coronavirus Business Interruption Loan Scheme to support long-term viable businesses who may need to respond to cash-flow pressures by seeking additional finance, with the first 12 months (was 6 months when first announced!) interest free (or rather the interest is covered by the Government). Contact your bank to enquire.
Got business insurance cover? If your business has insurance cover for both pandemics and government-ordered closure, this crisis should be covered. The government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim. Unfortunately, most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.
Remember Dean and Gina would be delighted to talk through your individual circumstances and how these reliefs might apply to you. We’re all working remotely at the moment, but are available on our usual contact numbers and emails during normal office hours.
Finally, please note Hanley & Co are accountants, not legal or employment lawyers. The information provided above is our understanding but we cannot be responsible for the above advice. If you are in any doubt, please take separate legal advice or await official guidance.