NEWS & UPDATES IN THE ACCOUNTING WORLD
MORE GRANTS FOR THE SELF-EMPLOYED
22nd October 2020
HMRC has published guidance on two new coronavirus- related grants for the self-employed that it will be administering. Who will be entitled to claim and when?
There will be two further rounds of grants and HMRC’s initial guidance sets out the terms and conditions for these (Click on 'The Next Steps' icon for more details).
Qualifying conditions. To qualify for the third and fourth rounds of SEISS, you must:
have been eligible for the previous SEISS grants, even if you didn’t claim them
be actively trading when you make your claim and intend to continue trading; and
be “impacted by reduced demand due to coronavirus” in the qualifying period. This condition differs slightly from previous grants and HMRC will shortly be publishing guidance on what it means in practice. We’ll keep you informed of any updates.
Qualifying periods. The qualifying period for the next grant runs from 1 November 2020 to the date you make a claim. The qualifying period for the fourth grant is expected to start on 1 February 2021 and end on the date of your claim.
How much? HMRC will use the information it already has about your business profits to work out the amount of each new grant. The third grant will be equal to 20% of your average monthly trading profits, capped at £1,875 and paid as a lump sum.
The amount of the fourth grant hasn’t been set. HMRC says it will review it nearer to the start of the qualifying period. As with the previous SEISS grants, these will count as income for tax and NI purposes.
You will be allowed to claim the grants if you were eligible for the previous ones and your business continues to be negatively affected by coronavirus. They will be payable for two three-month periods starting on 1 November 2020.
JOB RETENTION BONUS
7th October 2020
Job Retention Bonus: guidance published
The government has published two new guidance documents about its forthcoming Job Retention Bonus.
What key additional information do we now have?
The Job Retention Bonus (JRB) is designed to encourage employers to retain furloughed (and flexibly furloughed) employees in their employment after the Coronavirus Job Retention Scheme (CJRS) ends on 31 October 2020. The government will essentially pay you £1,000 for every furloughed employee who remains in your continuous employment until 31 January 2021. You can claim this one-off taxable bonus after you’ve filed PAYE returns for January 2021. The bonus is for you - you don’t have to pass it over to your employees.
All remaining CJRS claims must be made on or before 30 November 2020.
The additional information we now know includes that:
to be a qualifying employer, you must have a PAYE scheme registered on HMRC’s Real Time Information (RTI) system, have made an eligible CJRS claim in respect of the employee and have complied with your obligations to file PAYE accurately and on time under RTI reporting for employees between 6 April 2020 and 5 February 2021
you can claim the bonus in respect of qualifying employees, i.e. those who: (1) you’ve made an eligible CJRS claim for at some point; (2) are continuously employed from the end of the period covered by your most recent CJRS claim for them until at least 31 January 2021; (3) are paid a total of at least £1,560 (gross) across the three tax months from 6 November 2020 to 5 February 2021, with at least one payment of taxable earnings (of any amount) being received in each of those three tax months; and (4) aren’t serving contractual or statutory notice of termination of their employment (including notice of retirement) on 31 January 2021
your bonus claim needs to be presented in a six-week window between 15 February and 31 March 2021 (and information will be provided by the end of January 2021 on how to access the online claim service on GOV.UK)
no bonus claim may be made in respect of an employee if it is “abusive or otherwise contrary to the exceptional purpose” of the JRB
you can still claim the JRB if you make a claim for that employee through the Job Support Scheme.
Please feel free to contact us for more information on the Job Retention Bonus.
NEW LOCAL LOCKDOWN PAYMENTS AND TAX
3rd October 2020
Local lockdown grant.
Businesses in England required to close because of government imposed local lockdowns or restrictions are entitled to a new grant on top of any other coronavirus-related support they receive. However, businesses which are closed because of a nationwide ban, e.g. nightclubs, do not qualify. Check with your local authority if you think you are eligible.
Business rates link. The amount of grant depends on the rateable value of your business premises. If your premises has a rateable value of £51,000 or more, you are entitled to £1,500 for each property you occupy for each three-week period you’re required to close. Businesses with properties with a lower rateable value are entitled to £1,000.
Tip. If you rent your premises but someone else is responsible for the business rates you can also claim the grant. Plus, if you’re not required to close because of a local lockdown but are hit financially as a side-effect, you can apply to your local authority for a discretionary payment.
Direct tax consequences. As with all other central and local government coronavirus-related grants, the payments received count as taxable income as far as profits are concerned but are outside the scope of VAT.
VAT REPAYMENT TERMS EXTENDED
24th September 2020
Due to the second wave of coronavirus, the terms for paying deferred VAT from early 2020 have been made more generous.
On 24 September 2020, Chancellor Rishi Sunak announced that businesses which had taken advantage of the VAT deferral incentive from earlier in 2020 would no longer be required to pay the deferred amount back in full by 31 March 2021. Instead, there will be an interest-free instalment option to permit payments to be spread over eleven months.
The VAT deferral scheme affected payments that were due between 20 March 2020 and 30 June 2020. Originally, the amount deferred was required to be made good to HMRC by 31 March 2021. If your business took advantage of this, consider whether you would benefit from the new instalment option.
SEISS EXTENDED UNTIL APRIL 2021
28th September 2020
The government has announced that the self-employed will receive taxable grants to cover November 2020 to April 2021 if their business has been affected by coronavirus. Are you eligible?
Who can get the grant? The scheme has only been extended for those that are currently eligible for the Self-Employment Income Support Scheme (SEISS) and are actively continuing to trade but are facing reduced demand due to coronavirus. If you have not claimed a grant under the SEISS so far, but were eligible to, you can still claim the new grant. The key difference between this grant and the previous ones is that you must be actively trading, it does not appear to be available if you would be trading but are not able to due to Coronavirus.
How much will you be paid? The first grant will cover a three-month period from the start of November until the end of January. The government will provide a taxable grant covering 20% of average monthly trading profits, paid out in a single instalment covering three months’ profits. The maximum amount is £1,875 for three months, so to get the full amount you would need to have average profits of £37,500 per annum. The second grant will cover the start of February until the end of April. The government will review the level of the second grant and set this in due course.
How do you apply? HMRC has not yet released details of how to apply but with the previous grants, individuals were contacted directly by HMRC. We will update this with more details as soon as they come in from HMRC.