Self-employment income support scheme
This is meant to cover people whose main income is self-employment, including partners in partnerships.
The Government has promised that, if you appear to qualify, HMRC should get in touch with you during June 2020. Please beware of scams; as a general rule, HMRC will contact you by post and it does not use e-mail for correspondence without first asking your permission. It should not ask you to click on a link or to give personal details. Any message asking for such things should be treated as fraudulent.
The Government funding will be based on 80 per cent of your self employed profits up to £2,500 a month. It counts as taxable income and should be recorded in your business records.
Who is not covered?
If you began trading after 5 April 2019 or if your self employed business makes losses, you will not be eligible for the scheme.
Directors of companies are not covered by the scheme, because being a director of your own company is not (and never has been) treated as self-employment for tax purposes.
Deferment of taxes
All self-assessment tax payments due on 31 July 2020 are automatically postponed until 31 January 2021. We understand interest should be waived.
No VAT payments need now be made until 30 June 2020. You will have until 5 April 2021 to make all outstanding VAT payments. Again, we understand that interest should be waived.
There is no automatic deferment of corporation tax or PAYE. You have to contact the Government helpline number (now 0800 024 1222) to make agreements for time to pay.
We are recommending that if you have direct debit arrangements to pay any of your taxes, those arrangements should now be cancelled, and reinstated on 30 June 2020.
Coronavirus Job Retention Scheme
If you would normally lay off staff because there is no work for them to do and/or no money to pay them, the Government is introducing this scheme for the protection of staff.
You have to designate the employees concerned as “furloughed”. This means in plain English, you have no work for them and are sending them home. We recommend that you take competent legal advice before so doing because the process of designating the employees is covered by existing employment law, and you may be summoned to an employment tribunal if you get it wrong.
HMRC should reimburse 80 per cent the wages of furloughed workers, up to £2,500 per month, including employer’s NIC and workplace pension contributions. The mechanism for the reimbursement does not yet exist and should be set up in April 2020.
Who is not covered?
The scheme is supposed to prevent employees from being left with no money, at no notice, due to the action of their employers. It does not appear at the moment to cover directors, only employees. If at some time in the future the Government extends it to directors we intend to let you know at the earliest opportunity.
If you have had to self-isolate on medical advice due to the coronavirus or are ill with it, you should qualify for statutory sick pay from day one. This is different from “normal” statutory sick pay in which the first three days’ absence are not paid.
Rents and Vehicle MOTs
The Government has declared a three month moratorium on evictions, both residential and commercial.
They have also postponed for six months your legal liability to have your vehicles MOTd, to help you if garage services suddenly become non-existent due to the Government rules on social distancing.
Grants and Business Rates
If you are a retail, hospitality, or leisure business you should pay no business rates for 2020/21. You should receive from your local authority a grant of £25,000 if the rateable value of your property is between £15,001 and £51,000, and £10,000 if it is £15,000 or less.
If you are a nursery, you should pay no business rates in 2020/21.
Whatever kind of business you are, if you receive small business rates relief, you should be eligible for a grant of £10,000 from your local authority. In practice, most business tenants are not down as the business ratepayers, because their landlords are.
Thus, if you are a business tenant but not the business ratepayer, we suggest you get in touch with your landlord and request him to pass on to you any grant he may receive from his local authority in respect of the premises that you occupy.
Coronavirus Business Interruption Loan Scheme
The Government is guaranteeing to lenders up to 80 per cent on each loan. There should be no upfront costs, and the first 12 months of interest and charges should be covered by the Government.
All the major banks should be in a position to offer finance under the scheme. Unfortunately, in practice most bank branches are cutting back on their opening hours. You may find that you have to contact the bank online to begin with.
– By Stephen Handley, FCCA