Self Employed Scheme Phase 2 Claims Open from Today.

The SEISS Phase 2 Claim window opens today. Please find below a link to the government website where you can check eligibility, and claim for, the second SEISS payment. You should be able to check eligibility even if you have not been contacted by the HMRC since you received the first claim. If you were not eligible for the first claim, you will not be eligible for this one.

SEISS Website

This second claim will be for 70% of 3 months of their average income from 2016-19, capped at £6,570. This is expected to be the final payment under the scheme.

To be eligible you would need to:

  • Have traded in the tax year 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
  • Have traded in the tax year 2019 to 2020
  • Intend to continue to trade in the tax year 2020 to 2021
  • Were eligible for the first SEISS grant (even if you did not claim it)
  • Have had a trade which was still adversely affected by Coronavirus on or after 14th July 2020

Only people who’s self employed income is more than 50% of their total taxable income for the year are eligible.

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 keep any evidence that your business has been adversely affected by coronavirus at the time you made your claim, such as:

  • business accounts showing a reduction in turnover
  • confirmation of any coronavirus-related business loans you have received
  • dates your business had to close due to lockdown restrictions
  • dates you or your staff were unable to work due to coronavirus symptoms, shielding or caring responsibilities

You will need to report both grants:

The grant should be treated as income received on the day it’s paid for any Universal Credit claims or tax credit changes.

If any one has any questions please contact us and we will be happy to help.


Coronavirus: Self Employed Scheme Phase 2 Claims Open from 17th August

The government have announced further details on the extension to the SEISS (Self Employment Income Support Scheme) scheme for the self employed.

Initially the scheme allowed people to claim 80% of 3 months of their average income from 2016-19, capped at £7,500. This was to cover March – May 2020. The deadline for claims under the first stage of the scheme was 13th July 2020

The government have now announced that a second payment will be claimable in August to cover June, July and August. This will allow people to claim 70% of 3 months of their average income from 2016-19, capped at £6,570. This is expected to be the final payment under the scheme.

To be eligible you would need to:

  • Have traded in the tax year 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
  • Have traded in the tax year 2019 to 2020
  • Intend to continue to trade in the tax year 2020 to 2021
  • Were eligible for the first SEISS grant (even if you did not claim it)
  • Have had a trade which was still adversely affected by Coronavirus on or after 14th July 2020

Only people who’s self employed income is more than 50% of their total taxable income for the year are eligible.

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 keep any evidence that your business has been adversely affected by coronavirus at the time you made your claim, such as:

  • business accounts showing a reduction in turnover
  • confirmation of any coronavirus-related business loans you have received
  • dates your business had to close due to lockdown restrictions
  • dates you or your staff were unable to work due to coronavirus symptoms, shielding or caring responsibilities

You will need to report both grants:

The grant should be treated as income received on the day it’s paid for any Universal Credit claims or tax credit changes.

If any one has any questions please contact us and we will be happy to help.

Please find below a link to the new government website, which has more information

https://www.gov.uk/guidance/claim-a-grant-through-the-self-employment-income-support-scheme


Coronavirus: Self Employed Scheme Update June 2020

The government have announced further details on the extension to the SEISS (Self employment Income Support Scheme) scheme for the self employed.

Initially the scheme allowed people to claim 80% of 3 months of their average income from 2016-19, capped at £7,500. This was to cover March – May 2020. The deadline for claims under the first stage of the scheme is 13th July 2020

The government have now announced that a second payment will be claimable in August to cover June, July and August. This will allow people to claim 70% of 3 months of their average income from 2016-19, capped at £6,570. This is expected to be the final payment under the scheme.

To be eligible you would need to:

  • Have traded in the tax year 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
  • Have traded in the tax year 2019 to 2020
  • Intend to continue to trade in the tax year 2020 to 2021
  • Have had 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

Only people who’s self employed income is more than 50% of their total taxable income for the year are eligible.

If any one has any questions please contact us and we will be happy to help.

Please find below a link to the new government website, which has more information

www.gov.uk/coronavirus


Coronavirus: Furlough Scheme Update June 2020

The government have announced further details on the extension to the furlough scheme for employers. This includes the eventual subsidies employers will need to pay, as well as a new part time “Flexible Furlough” scheme.

How the Furlough Scheme Will Work Going Forward

For June and July the furlough scheme will remain unchanged, but flexible furloughing will come into effect in July.

From August, the government grant provided through the job retention scheme will be slowly tapered, so that employers pay part of the money to staff instead of the government. From the end of October the scheme will stop completely.

  • In June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work
  • in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions. In other words, the same figures will go through payroll but employers will only be able to reclaim the salary costs from the government, not pension and ER NIC.
  • in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500. In other words, the same figures (80%) will go through payroll but employers will only be able to reclaim 70% of salary costs from the government, and none of the pension and ER NIC.
  • in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500. In other words, the same figures (80%) will go through payroll but employers will only be able to reclaim 60% of salary costs from the government, and none of the pension and ER NIC.

For flexible furloughing, the cap on the furlough grant will be proportional to the hours not worked.

If you are a smaller employer, some or all of your employer NIC bills will be covered by the Employment Allowance, so you should not be significantly impacted by that part of the tapering of the government contribution.

Flexible Furlough

Employers have expressed their issue with the current rules that workers can only be furloughed, or back at work, with no in-between or part time basis allowed. The government have reacted to that by introducing “Flexible Furlough” from 1st July.

From 1‌‌ July 2020, you’ll have the flexibility to bring previously furloughed employees back to work part-time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August.

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

Any working hours arrangement that you agree with your employee must cover at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for furloughed hours, you will need to report and claim for a minimum period of a week. You can choose to make claims for longer periods such as on monthly or two weekly cycles if you prefer. You will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.

If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules.

So as an example, Jane works 5 days a week 7 hours a day at £10 per hour (35 hour week) She works a lot of overtime so her furlough payments have been based on her average monthly pay 2019-20. Her employer is charged £5 per week in Employer NI. She is not in a pension scheme.

She comes back from furlough on 1st July to work 3 days a week instead of 5.

Jane’s employer would be able to pay her gross 3 days x 7 hours x £10 = £210

Her employer would then be able to claim 2/5th of her previous furlough claim for her wages, and 2/5th of her Employer’s NI.

We realise that this is somewhat complex. We will be able to calculate this for all of our clients, but you will need to keep note of your staff’s contracted hours, and hours worked – even if they are on a monthly salary, in order for us to make the claim for you.

If any one has any questions please contact us and we will be happy to help.

Please find below a link to the new government website, which has more information

www.gov.uk/coronavirus


Coronavirus: Support for Businesses

We thought it would be helpful to summarise the support for businesses that is currently available from the government. More in-depth information is on previous posts on this website, or the government website – a link is at the bottom of this post.

Support for Employees

Coronavirus Job Retention Scheme

  • This is a grant – you will not have to pay this back. But you will have to pay tax and NI on it, and declare it if you are on benefits.
  • Any UK business with employees can claim, including charities, recruitment agencies and public authorities.
  • Covers full-time, part-time, agency and zero hour contract employees.
  • Employees can be furloughed on 80% of their wages (capped at £2,500 per month) for up to 3 months if they would otherwise be made redundant, as long as they do no work for their employer at all whilst furloughed.
  • Employers can “top up” the other 20% of the furlough pay but they don’t have to.
  • Employees already on unpaid leave cannot be furloughed. Employees on Sick Leave or self-isolating should get SSP, but can be furloughed after this.
  • If an employee is working but on reduced hours or reduced pay they are not eligible for the scheme.
  • They must be furloughed for a min, of 3 weeks and must be notified in writing. They can be brought back and then furloughed again if necessary.
  • Some staff can be furloughed whilst some still work. If staff have more than one job they can still work elsewhere or do volunteer work.
  • Company directors can be furloughed as long as they have stopped providing services or generating income.
  • Furlough money will be able to be reclaimed by employers from the HMRC from approx. the end of April through a new portal.

Support for Sole Traders, Partnerships & the Self Employed

Coronavirus Self-Employed Income Support Scheme

Who can claim and what you’ll get:

  • This is a grant – you will not have to pay this back. But you will have to declare it on tax returns and if you are on benefits.
  • The scheme will pay taxable grant payments to anyone who submitted a 2018-19 tax return and is still trading through to the 2020-21 tax year. On the return self-employment has to have been your main source of income, and you must have made a profit of less than £50,000 ( or it was if averaged over the last 3 yrs)
  • You will get 3 months’ pay of 80% of your average self-employed profit based on the last 3 years (or whatever period you were trading if it was less than this.)

The bad news:

  • If you were not self employed on 5th April 2019 or if you have stopped trading since 5th April 2019, or are about to, you cannot claim.
  • If you average profit was over £50,000 in the last 3 years, or if self-employment was not the main source of income on your return, you cannot claim.
  • The money will be paid in one lump sum for the 3 months, but not until June 2020 at the earliest.

The HMRC will contact people that are eligible and explain how to claim the money. This will not be for at least 4 weeks – so expected to start in May. They will not contact you by text or email – please be aware of fraudsters.

Loans For Businesses

Coronavirus Business Interruption Loan Scheme (CBILS)

Good points:

  • Loans should be available for most small businesses with turnover under £45m interest free for at least 12 months – sole traders, partnerships or Ltd Cos.
  • Loans are backed by the government so personal collateral should not be required.
  • Loans should be available for businesses that would not have been eligible for help before.

Bad points:

  • Unlike the other support it will need to be paid back. The money is a loan. Any money owed over 12 months may have interest charged.
  • Loans must be for a business reason and cannot be used to pay personal living expenses etc.
  • Some banks are asking for personal or business assets as security – which is not as the government intended.
  • Some banks will offer you loans and overdrafts that they would normally have given you, at high interest rates, before they will offer you one of these loans.

If you have approached a bank and they have not offered you one of these loans, have asked for security or your own bank has been unhelpful, we would recommend trying another bank from the list of lenders. Full details of the scheme is on the British Business Bank website – see link below.

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/for-businesses-and-advisors/

Grants for those with Business Premises

The Retail and Hospitality Grant Scheme

  • This is a grant – you do not have to pay it back.
  • This scheme will provide businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
  • For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.
  • For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.

If you are not sure if you get one of these bills, check your paperwork. Councils should be contacting businesses shortly about this money.

Businesses in the retail, hospitality and leisure sectors will also not have to pay rates for the 2020-21 tax year.

Small Business Grant Scheme

  • This is a grant – you do not have to pay it back.
  • The government will provide funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief.
  • This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.

If you receive a rates bill from the council every year, but it is adjusted to zero with the wording “Small Business Rates Relief”, you should be eligible for the grant. This we think also applies to holiday lets as well as businesses with premises. It would not apply to those with a high enough rateable value that they have to pay rates, or for normal rental property businesses that are not holiday lets.

If you are not sure if you get one of these bills, check your paperwork. Councils should be contacting businesses shortly about this money.

Other Business Support Available

  • All businesses that are VAT registered can delay paying VAT due between 20th March and 30th June 2020. This will now be due next year. (VAT returns do still have to be submitted)
  • Any individual on Self Assessment can now delay payments on account due 31st July 2020, and not pay them until 31st January 2021.

Other Personal Support Available

  • Universal credits are available immediately without a wait and you can earn more money than before and still be eligible. The amounts awarded have also been increased, including the amount to cover rent.
  • Most banks and building societies have agreed to offer up to 3 months mortgage payment holidays
  • Anyone with a loan or HP agreement may also be able to get up to 3 month’s holiday from payments.
  • Anyone paying council tax who is in real hardship can apply to the council – the council may be able to use money provided to them to reduce your council tax bill in the short term.
  • If you pay council tax you may also be able to ask if you can delay your payments for the first 2 months of the new tax year, paying in Feb and March next year instead. As they usually collect only 10 payments a year some councils have agreed to this.

All of the different types of support that are available are confusing, and we have tried our best to summarise them in plain English. Further in depth information is available both on this website and the government website – please make sure you meet all of the criteria to receive any of the support packages offered. We would be happy to provide specific advice to anyone who needs it, whether you are a client or not, free of charge. Please get in touch and we’ll be happy to help. We all need to help each other right now.

Please find below a link to the new government website, which has more information about all of these support packages

www.businesssupport.gov.uk


The CIS VAT Reverse Charge – VAT’s not going to be the same for Builders from Oct 2020!

CIS VAT Reverse Charge

In an attempt to stop fraud in the construction industry, HMRC will be introducing a domestic reverse charge which will take effect from 1st October 2020.

The new CIS VAT reverse charge will only apply to certain building and construction services. It will mean that the customer will now be liable to account for the VAT on purchases, rather than the supplier, just as it currently works when dealing with businesses within the EU.

The idea is to limit the amount of VAT paid from business to business, so that fraudsters cannot syphon off the money and not pay it over to the HMRC.

Although on the whole this will not have a negative affect on most businesses, it will affect cash flow, and will of course mean yet more paperwork at a time when small businesses are under pressure already.

This information was accurate as of March 2020.

There is more information about the CIS VAT reverse charge on the HMRC website here.

Please download our full free PDF guide for a full explanation as to the new rules, or get in touch for a no obligation chat.

Download CIS VAT Reverse Charge Guide


MTD For VAT – The Beginning of the End for the Annual Tax Return?

Making Tax Digital for VAT

Making Tax Digital for VAT is a government initiative that went live in April 2019 for anyone over the VAT threshold of £85k turnover a year. In a nutshell, returns now need to use software to submit their returns to a new government gateway, and cannot use the HMRC portal any more. They will also need to keep their accounting records digitally i.e. not on paper or spreadsheets.

This general requirement to submit and keep records digitally (just known as MTD) is expected to roll out to more businesses, and will drastically change the tax return system as we know it. The endgame is to have all businesses, no matter their size, submit a return each quarter instead of the annual Self Assessments of today, with additional returns at year end to finalise the figures.

These drastic changes will have a huge impact on business owners. It could also mean that many businesses, that have not used an accountant before, may need to engage one for the first time in order to comply.

In our opinion the rollout of MTD for VAT has been a much bigger deal for businesses than the HMRC first thought, so it is likely that further rollouts to other businesses will be delayed. However – it would be prudent to look at software solutions – especially those on the cloud. A lot of them do make sense for most businesses outside of these changes to the tax regime, and guarantee to save most business and company owners considerable time. Both FreeAgent and Xero, along with other software providers, have MTD for VAT solutions in place.

More information on MTD is available for the HMRC website here.

We are keeping up to date with information as soon as it is being released by the HMRC, and will keep all of our clients as informed as possible. Please get in touch of you are newly VAT registered and need help setting up MTD for VAT, or if you just need further information.