The government has announced a raft of measures aimed at both businesses and individuals in order to support them during the Coronavirus crisis. Here is an at a glance summary of the main proposals for businesses and individuals.
HMRC have released videos and a number of live webinars to help taxpayers learn more about the support available to them. Click here
An online tool has been launched to help businesses access and determine what financial support is available to them during the pandemic. Here is a link: https://www.gov.uk/business-coronavirus-support-finder. This takes the form of a questionnaire which will then be used to redirect the user to the relevant support scheme.
SUPPORT FOR BUSINESS
Let’s have a look at the main areas of support are outlined below.
Coronavirus Job Retention Scheme (CJRS)
The current or ‘old’ scheme closed to new entrants on 30 June 2020 such that any employee who was not furloughed for the first time by 10 June at the latest (and therefore completed their first minimum 3-week furlough by 30 June) will not be eligible for participation under the flexible CJRS scheme from now (July) until the scheme closes in October.
Read our full article on CJRS here to find out more about the new or current Flexi-Furlough scheme.
Job Retention Bonus
On 8th July the government announced an intention to introduce a one-off payment to UK employers for every furloughed employee who remains continuously employed through to 31 January 2021.
It has been announced that qualifying employees would need to earn above the Lower Earnings Limit of £520/month on average between 1 November and 31 January 2021.The payments will be made in February 2021 and we expect to see more details released later this month
Stamp Duty Land Tax (SDLT)
There will be a temporary increase to the Nil Rate Band of Residential SDLT, in England and Northern Ireland, from £125,000 to £500,000. This will apply from 8 July 2020 until 31 March 2021 and therefore there is a 0% rate of SDLT payable by people ‘moving home’ during the above period.
The new rules have made it into the SDLT manuals already!
SDLTM00055 tells us that this applies to first time buyers and those who have owned property before. It does not apply to those buying additional dwellings. The rate for additional dwellings will be 3% up to £500,000 for period set out above.
Deferment of VAT payments
It was possible to defer VAT payments for up to 3 months. All UK VAT registered businesses were eligible, and this applied for all VAT payments due between 20 March 2020 and 30 June 2020. There was no need to apply for this scheme. Businesses who had deferred payment must pay the VAT due on or before 31 March 2021.
The scheme has now closed. A UK Vat registered business must now pay the VAT in full on all payments becoming due after 30 June.
It does not cover payments for VAT MOSS or import VAT.
Temporary VAT cuts
A reduced (5%) rate of VAT will apply to supplies of food and non-alcoholic drinks from UK restaurants, pubs, bars, cafés. This will apply from 15 July to 12 January 2021. For the same period, we will see the same reduced rate apply to supplies of accommodation and admission to attractions across the UK.
The Corporate Insolvency and Governance Act
The act received Royal Assent and came into force on 26 June 2020. The main provision is that it gives businesses in distress a 20 day period where it receives protection from creditor action whilst they seek professional restructuring advice. A licenced insolvency practitioner can act in a monitor capacity to ensure that the protection is in place. The Act provides temporary relief until 30 September 2020 from being subject to winding up petitions where the business can demonstrate its difficulties arise from trading conditions arising from Covid-19.
Time to Pay
Any business that pays tax to the UK government and has outstanding tax liabilities will be able to apply for their case to be reviewed by HMRC with a view to arranging a bespoke time to pay agreement. This applies to all businesses including the self-employed. HMRC have set up a dedicated helpline: 0800 0159 559.
If you cannot pay your self-assessment bill and you owe less than £10,000 then it may be possible to arrange to pay in instalments online via the self-assessment portal.
Statutory Sick Pay
Employers will be able to reclaim up to 2 weeks of SSP payments per employee where those SSP payments related to Coronavirus. This applies to all UK employers with 250 employees or less as at 28 February 2020. The reclaim will not be via RTI, instead HMRC will set up a new portal to facilitate this. The online service launched on 26 May. Claim here.
Employers can pay an employee SSP from the first day that they are off work due to Covid-19 if they were off work for at least 4 days.
Employees do not need to give their employers a ‘doctor’s fit note’ in order for the employer to make a claim.
Employers can claim for periods of sickness from 13 March if the employee had coronavirus, symptoms or they were self-isolating.
Employers can claim for periods starting on or after 16 April where the employee was shielding.
Employers can claim for periods starting on or after 28 May where the employee has been notified by the NHS or public health bodies that they’ve come into contact with someone with coronavirus.
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.
IR35 for the Private Sector
Changes to the IR35 off payroll working rules in the private sector have been delayed by 12 months to April 2021.
Company Car Availability & P11d charge
HMRC has announced that it will accept that a car is unavailable in certain circumstances where restrictions on movement applies because of coronavirus. The impact on P11d benefits are that the car benefit will arise where an employee is simply instructed not to use the car or where the employee is unable to return the car. For the car to be shown as unavailable either the contract will have terminated and the keys are returned to the employer or third party or where the contract has not been terminated the car will show as unavailable 30 consecutive days from the date the car keys are returned to the employer or third party.
PPE for employees
There is non taxable benefit where an employer provides the PPE or reimburses the cost of the PPE. However, an employee cannot claim tax relief for these expenses from HMRC. These expenses would not fall within Section 336 of ITEPA 2003. If an employee requires PPE to carry out their role then the employer must ultimately bear the cost.
On the 8th July the govt announced that it would reverse an earlier announcement and as a result introduce an income tax and national insurance exemption for employer provided covid-19 antigen tests.
The government will introduce a new Kickstart Scheme to create hundreds of thousands of high quality 6-month work placements aimed at those aged 16-24 who are on Universal Credit and are deemed to be at risk of long-term unemployment.
The funding will cover 100% of the relevant National Minimum Wage for 25 hours a week, plus the associated employer National Insurance contributions and employer minimum automatic enrolment contributions
HMRC have introduced a business rates holiday for retail, hospitality and leisure businesses in England for the 2020/2021 tax year. This will apply to businesses such as shops, bars and cinemas. No action is required and as local councils will apply the discount automatically.
HMRC have also introduced a business rates holiday for Nurseries that are in Ofted’s Early Years Register and provides care for children up to 5 years old. Again this applies for 2020/2021.
Help for councils in England
Councils will be allowed to defer £2.6 billion in business rates payments to central government, and £850 million in social care grants will be paid up front this month in a move aimed at helping to ease immediate pressures on local authority cash flows. This means that councils will be able to defer £2.6 billion of payments, over the next 3 months, that they are due to make to central government.
Retail, Hospitality and Leisure Grant (RHLG)
Under the Retail, Hospitality and Leisure Grant (RHLG) the retail, hospitality and leisure sectors in England can also apply for a taxable cash grant of up to £25,000 per property. For rateable values of under £15,000 they will receive £10,000. Between £15,001 and £51,000 they will receive a grant of £25,000. No action is required as local councils will write to eligible businesses. This applies to the rateable value of each property at 11 March 2020.
Small Business Grant Fund (SBGF)
Under the Small Business Grant Fund (SBGF) smaller businesses within receipt of the Small Business Rate Relief or Rural Rate Relief at 11 March 2020 will be eligible for a payment of £10,000. Again this will be delivered by local authorities who will contact eligible businesses directly.
Discretionary Grants Scheme
Local councils can issue taxable grants of up to £25,000 to qualifying businesses. Small businesses in England with fewer than 50 employees that were trading on 11 March 2020 and have been adversely impacted by the pandemic might be eligible for a grant at their local council’s discretion.
Applications are therefore to be made via your local council’s website.
The government has asked local councils to prioritise amongst others; regular market traders, small businesses in shared offices and those operating out of industrial units where the business has been paying fixed building costs such as rent.
Small and Micro businesses with fixed property costs that are NOT eligible for the Small Business Grant Fund (SBGF) or Retail, Hospitality and Leisure Grant Fund(RHLG), Fisheries Response Fund, Dairy Hardship Fund, Domestic Seafood Supply Scheme and the Zoos Support Fund can apply for this grant.
Businesses would still be eligible if they have claimed under CJRS or SEISS.
Bounce Back Loan Scheme (BBLS)
The Bounce Back Loan scheme will help small and medium-sized businesses based in the UK to borrow between £2,000 and up to 25% of their turnover. The maximum loan is £50,000 for up to 6 years if they have been negatively affected by coronavirus. There will be no interest to pay for the first 12 months and the government will guarantee the whole loan. After 12 months the rate of interest will be 2.5%.
As with the other schemes, this will apply to businesses established before 1 March 2020, based in the UK that have been adversely affected by Covid-19 and was not ‘undertaking in difficulty’ on 31 December 2019.
The scheme launched on 4 May 2020 and it is not open to anyone who is already claiming under the CBILS scheme (see next section). However, for loans up to £50,000 it is possible to transfer from CBILS to this more generous Bounce Back loan scheme.
Begin the application process via the British Business Bank here
The British Business Bank remind us that the business must also have been:
- Trading or undertaking commercial activity in the UK and was established by 1 March 2020
- The business is not using the CBILS, CLBILS or CCFF schemes (see below)
- Derives more than 50% of its income from trading activity
- is notin bankruptcy or liquidation or undergoing debt restructuring at the time it submits its application for finance
- Businesses in the following sectors cannot apply; banks, insurers and reinsurers (but not insurance brokers), public-sector bodies state-funded primary and secondary schools
Business Interruption Loan Scheme (CBILS)
The British Business Bank has launched a scheme to help support UK based businesses with turnover of no more than £45 million per year through this crisis. The government will provide lenders with a guarantee of 80% on each loan. This applies for loans of up to £5m in value and for up to 6 years. No interest will be charged for the first 12 months via a Business Interruption Payment.
The scheme is now open for applications. To apply, you should talk to your bank or one of the 40 accredited finance providers (not the British Business Bank) as soon as possible, to discuss your business plan.
The major high street banks are on this list of 40 providers. Each of the banks have further information on their own websites. This scheme targets SME businesses and the following two schemes target larger businesses.
Coronavirus Large Business Interruption Loan Scheme (CLBILS)
The Coronavirus Large Business Interruption Loan Scheme (CLBILS) will support large businesses, with an annual turnover of between £45 million and £500 million, to access loans of up to £25 million. This scheme will be delivered through commercial lenders where the business is unable to secure regular commercial financing.
All firms with a turnover of more than £45 million can apply for finance of up to £25 million and those firms with turnover of more than £250 million can apply for up to £200million from 28 May.
Borrowers under CLBILS will be able to borrow up to the lower of 25% of turnover or £200 million. Borrowers wishing to borrow more than £50 million will be subject to a number of restrictions on dividend payments, senior pay and share buy backs. The standout restriction being that Borrowers cannot make any dividend payments.
The government will provide lenders with a guarantee of 80% on each loan to give lenders further confidence in continuing to provide finance.
Corporate Financing Facility (CCFF)
The Bank of England will buy short term debt from larger companies that are ‘fundamentally strong’. The scheme will run for at least 12 months.
The Bank of England have set out the eligibility criteria: https://www.bankofengland.co.uk/news/2020/march/the-covid-corporate-financing-facility The site also sets out what is meant by fundamentally strong and sets out in more detail the role of credit ratings in this decision process.
If a company’s accounts are unlikely to be filed on time owing to being affected by Coronavirus then an application can be made to extend the period allowed for filing by 3 months. Here is a link. If an application is not made and there is a late filing then the normal penalty regime would apply, so it is important to make the application ahead of the deadline.
It was announced on Thursday 16 April that Companies House will temporarily pause the strike off process to prevent companies being dissolved. This will give businesses more time to avoid being struck off by getting their paperwork in order.
On 26 June 2020, the Companies etc. (Filing Requirements) (Temporary Modifications) Regulations 2020 (“the regulations”) were signed into law. They came into force on 27 June 2020.
More companies will now get an extension to their accounts filing deadline. For example, if a private company or an LLP had a filing deadline between 27 June 2020 and 5 April 2021 then the filing deadline will be extended from 9 to 12 months.
Where employers meet expenses for those working from home
HMRC have set out a guide which aims to set out the tax position where employers either meet expenses incurred by employees working from home or provide equipment.
As you would imagine, the provision of a mobile phone or a laptop will not result in a taxable benefit in kind. However, with other expenses HMRC reminds us of the need to monitor significant private use and the need for good record keeping.
Employers can pay a flat rate £6/week or £26/month payment or reimbursement to employees for additional household expenses that they incur owing to the fact that they work from home. Payment at this rate will mean a reduced administrative burden on employers to check these expenses and the payments will be non-taxable.
A Tax Information Impact Notice(TIIN) was issued on 22 May. This is a policy paper that creates a temporary income tax and national insurance (class 1) exemption, for the remainder of 2020/2021, where an employer reimburses expenses incurred by an employee in buying their own relevant home office equipment.
A separate and existing tax exemption exists where an employer provides home office equipment and the employer retains ownership of that equipment. See s316 ITEPA 2003.
Protection for Commercial Tenants
Any commercial tenant who missed a lease payment up until 30 June will not have been automatically evicted. The government does not appear to have extended this beyond 30 June and so this will not apply from this month onwards. This is not a rental holiday and all rent payments must ultimately be met as part of the rent agreement.
Trade Credit Reinsurance Scheme
The Trade Credit Insurance scheme protects businesses if and when a customer defaults or delays on payment. It insures suppliers selling goods against the company they are selling to defaulting on payment. Due to Coronavirus there is a danger that insurance will be withdrawn or that premiums will increase to unaffordable levels. The government is to support the Trade Credit Insurance scheme by providing backing which it will guarantee up to £10billion in order to provide confidence and support the provision of this insurance.
Support for England’s fishing businesses
A £10 million fund for England’s fishing and aquaculture sectors has been announced. It is expected that more than 1,000 fishing and aquaculture businesses in England will benefit from direct cash grants and will run for three months. The scheme is open from Monday 20 April.
SUPPORT FOR INDIVIDUALS
Self-employment income support scheme (SEISS)
A package has been announced in order to provide support for the self-employed in the form of 2 taxable cash grants.
The first grant allows individuals to claim a taxable grant worth 80% of their trading profits up to a maximum of £2,500 per month or £7,500 for the 3 months from March to May 2020.This must be claimed by 13 July.
A second and final grant will cover June to August and will be worth up to 70% and this will be capped at £6,570 for the 3 months. An individual does not have to claim the first grant in order to claim the second grant. The second grant can be claimed from 17 August to 19 October.
Our full SEISS article can be found here
Green Homes Grant
The government will introduce a £2 billion Green Homes Grant, providing at least £2 for every £1 homeowners and landlords spend to make their homes more energy efficient, up to £5,000 per household.
Mortgage and rent holiday
Tenants as well as mortgage borrowers can apply for a 3 month payment holiday. This was first announced in March and was due to come to an end in June. It was announced on Friday 22 May that this scheme has now been extended to 31 October. Homeowners struggling to pay their mortgage due to Coronavirus will be able to extend their mortgage payment holiday for a further three months. Interest will continue to be charged on any amount that they owe. The government has announced that they intention is that no one can be evicted from their home over the 3 months where this applies.
The government has extended the stay on repossession proceedings in the private and social rented sector until 23 August 2020. Lenders should also pause repossession proceedings until 31 October 2020
Council Tax Hardship Fund Discount
The government has announced a £500 million Hardship Fund. All working age claimants will be entitled to a discount of up to £150 for 2020/2021. Councils have the discretion to offer a larger discount if they wish to. Those of working age and in receipt of Local Council Tax Support will be eligible for this scheme.
The 2nd payment on account of tax that is due by 31 July 2020 will be deferred until 31 January 2021. There is no need to apply for this offer to apply. No penalties or interest for late payment will apply during this deferral period. HMRC’s guidance was updated on 15 May to state ‘HMRC will not charge interest or penalties on any amount of the deferred payment on account, provided it’s paid on or before 31 January 2021.’
Capital Gains Tax – UK property account
UK Residents need to report gains made on UK residential property disposals from 6 April 2020 within 30 days (there are some exceptions to this rule).
Due to coronavirus, UK residents will not get a late filing penalty for any transactions completed on or after 6 April 2020 to 1 July 2020 and reported up to 31 July 2020. Interest will continue to be charged if the tax is not paid within 30 days for all transactions from 6 April 2020. Transactions from this month, July 2020, will need to be reported within 30 days or a late filing penalty will be charged.
A similar provision is set up for non-residents too. However, non-residents must report all disposals of any UK property and must do so even where there is no tax to pay. Again, whilst interest will be charged the late filing penalty will not be charged for transactions between 6 April 2020 and 1 July 2020. Transactions from 1 July 2020 will need to be reported within 30 days or a late filing penalty will be charged.
Statutory Sick Pay
Where Covid-19 applies, there is no need to wait for 3 working days before an employee would be eligible for SSP. An employee would be eligible for SSP from day 1 rather than day 4.
Employees will continue to be entitled to SSP for the normal maximum of 28 weeks per year (further restrictions apply for linked periods of sickness that last more than 3 years).
Statutory Residence Test (SRT)
HMRC have updated their manuals to account for the impact of Covid-19. They acknowledge that there will be those that have had to remain in the UK due to unforeseen circumstances beyond their control following the Coronavirus outbreak. HMRC have set out what they consider to be ‘exceptional days.’ See RDRM11005. For example, those that are in self-isolation or unable to leave the UK due to border closures are likely to meet the criteria for exceptional days. Exceptional days are days that can be disregarded in trying to establish whether an individual is resident in the UK. The maximum number of exceptional days is currently 60.
Visa applicants and temporary UK residents
HMRC has updated their guidance to those individuals who are in the UK on a temporary visa, those working in the NHS on a visa and British Nationals overseas. Here is an example of one of the measures; anyone who is on a temporary visa in the UK with a visa expiring between 24 January and 31 July 2020 could apply to have their visa extended to 31 July 2020 if they couldn’t leave the UK due to travel restrictions as a result of this pandemic. HMRC will no longer allow people to extend their visas but they will give individuals a grace period until 31 August 2020. Additional information: https://www.gov.uk/guidance/coronavirus-covid-19-advice-for-uk-visa-applicants-and-temporary-uk-residents.
Where employers do not meet additional expenses for those working from home
Where an employee has been asked to work from home (as opposed to voluntarily working from home) it is permissible for an employee to make their own claim for reimbursement from HMRC for additional expenses that they have incurred.
Such a claim should only reflect the additional expense from working from home. If, for example, you pay £20/month for broadband and there is no additional expense arising from the fact that your employer has asked you to work from home then no claim should be made in respect of that expense.
Strictly, an employee should be able to show that they are obliged to incur and pay these additional expenses as a holder of the employment and the amount incurred is wholly, exclusively and necessarily in the performance of the duties of the employment.
Claims by employees at £6/week or £26/month, without having to submit receipts, are likely to be readily accepted by HMRC to fall in to line with the amount that an employer can pay under the simplified arrangements (see above).
If you believe that you have higher costs than this then you can claim more, but you will need evidence of the cost increases including receipts and records. In either event, employees can use Form P87 to make their claim for reimbursement. Click here to take you to the online form. A claim for allowable expenses in excess of £2,500 per tax year cannot be made via a Form P87 and should be made via a self-assessment tax return.
Employees will need to set up a Government Gateway ID in order to make an online claim. The link provided above includes a link to a postal form as an alternative to an online claim.
Employees will need their National Insurance number, Employee number and Employer’s PAYE reference (these can be found on payslips).
You have four years from the end of the tax year to make a claim; so, for 2019/20, you must make a claim by 5 April 2023.
Temporary Measures relating to childcare offers
The Government has announced that any working parent usually eligible for 30 hours free childcare or Tax-Free Childcare will remain eligible if they fall below the minimum income requirement due to COVID-19.
Parents who are critical workers will also remain eligible for these entitlements if their income has increased over the maximum threshold of £100,000 per year during the COVID-19 pandemic.
Our telephone tax helplines are here to support our clients so please do contact us if you would like to discuss any of the above measures in greater detail.
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