We understand in these uncertain times that many of you are concerned about your personal and or company situations. We’ve been contacted by some of you already asking how you may or are being affected and what is available to migrate the effects of the current lockdown on your livelihood.

The government has reacted to this over the last few weeks with a number of measures aimed at supporting you and the wider economy. Some of these are clearer than others in how they will work and some of them, as you can appreciate, still definitely need some fleshing out. In any case we thought it might be worth compiling these measures for you to give you an idea of what may be available. The measures announced so far are as follows:

• If you have premises within the scope of Business Rates then the Business Rates holiday will be available if you are in the Retail, Hospitality or Leisure sector, or run a nursery
• If you have business premises with a Rateable Value of less than £15,000 then the £10k grant will be available
• If you have business premises with a Rateable Value of £15,000 to £51,000 then the £25k grant will be available if you are in then Retail, Hospitality or Leisure sector
• 80% funding for salary of laid off employees, but you will need to pay the other 20% as I understand it.
• Funding from Government for SSP for employees
• 80% funding for director salary is a possibility, but this will be salary not dividend, so for anyone on a low salary/high dividend arrangement the amount will be small. Q – is it worth increasing salary? Maybe, but we will need to see legislative detail of the support package – its quite likely there will be anti avoidance provisions to prevent salaries being increased in order to increase payouts, possibly the amounts will be restricted to average salary over last few months, but not known.
• 80% Self Employed Income Funding up to £2500 provided taxable income is regularly under £50,000. Will not apply to limited company directors however.
• If you are off work ill (as opposed unable to work due to client lay off / closed sites / lack of clients) then SSP available with 100% recovery, again salary not dividend.
• Anyone who has been within IR35 should be better off as you would have had a high salary. Query how this works in a Public Sector IR35 situation where there is a deemed employer, but there should be a solution.
• Coronavirus Business Interruption Loan Scheme is a possibility but its a loan not grant
• Tax deferrals for VAT will be available
• Presumably tax deferral for Self Assessment although at present HM Government guidance says this only applies to the self employed.
• Time to pay service available for taxes
• Company Directors can claim means tested Universal Credit: Standard Universal Credit amounts (2019/20): Single and under 25 £251.77 Single and 25 or over £317.82 In a couple and you’re both under 25 £395.20 (for you both) In a couple and either of you are 25 or over £498.89 (for you both)

Coronavirus Self-employment Income Support Scheme

This has been announced today, details are evolving, but this is what we know:

• a taxable non repayable grant for Self Employed and Partners – not company directors
• only available if your average profits over 16/17, 17/18 and 18/19 less than £50,000
• grant is 80% of average profits over 16/17, 17/18 and 18/19 to a maximum of £2,500 / month (believe this is 80% of £2,500 – punctuation not clear on Government website)
• scheme lasting three months initially
• the averaging year rules adjust if you started Self Employment in that period
• Self Employment must be the majority of your income
• payments to be made from June onward as one lump sum
• no restriction on continuing to work

HMRCs Guidance: Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme

Company Directors / shareholders not covered. In theory can claim the Coronavirus Job Retention Scheme grant at 80% of salary but:

• salary only not dividend and can’t continue to work whilst claiming

Coronavirus Job Retention Scheme

Widely touted on social media as paying 80% of the wages of laid off staff, its not quite as simple as that. Here is what HM Government has to say:

“All UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

“Eligibility – All UK businesses are eligible.

“How to access the scheme – You will need to:

designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required) “HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers. If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan”

My interpretation is that the remaining 20% of wages needs to be paid by the employer. However there is contradictory information elsewhere on .gov.uk suggesting the employer only has to pay the 80%. Add into this that Employment Law still stands, and the position on laying off and paying staff is not clear at present.

VAT and Income Tax Deferrals

This hasn’t got much press.

“VAT – For VAT, the deferral will apply from 20 March 2020 until 30 June 2020. Eligibility All UK businesses are eligible. This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.”

Its not clear yet how this will operate – will you have to tick a new box on your vat submission? Or will they simply not take direct debits, bearing in mind almost everyone pays vat by direct debit.

“Income Tax – For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021. Eligibility – Self Employment. How to access the scheme This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period. HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.”

I see an immediate issue here with the non Self Employed in Self Assessment, eg company directors, PSCs, Landlords. I suspect they are included, but its not fully thought through.

Statutory Sick Pay for Employees

SSP will apply from first day of absence not the fourth day. SSP will apply to people with Covid-19 people who have to self isolate people unable to work because they have been advised to self isolate (not sure how this differs from previous head) people caring for someone in their household with Covid-19 Relaxed rules around fit notes from GPs – employers advised to use their discretion not to request them. They will also be issued by NHS 111 Start date for these rules to be confirmed in a forthcoming Covid-19 bill, presumably in coming days given the urgency SSP is £94.25/week 2019/20 and £95.85/week 2020/21. The amount is subject to Tax and NI under PAYE. Average earnings requirement £118 p/w 2019/20 and £120 2020/21

SSP Reimbursement for Employers

Employers with less than 250 staff will have SSP costs refunded from government up to 2 weeks per employee – at present employers cannot recover SSP at all Start date for these rules to be confirmed in the forthcoming Covid-19 bill

Sick Pay for the Self Employed and those Ineligible for SSP

“New Style” Employment and Support Allowance (NSESA) will be available to people with Covid-19/Self Isolating from day 1 rather than day 8. NSESA is £73.10 (or £57.90 if aged under 24) a week – rises to £74.35 for 2020/21 Dependant on NI contributions or credits over previous two years, See https://www.gov.uk/guidance/new-style-employment-and-support-allowance-detailed-guide#overview. Savings aren’t taken into account, but pensions are Can claim NSESA without visiting Job Centre (at the time of writing this isn’t reflected in all Government web guidance) Possibility of applying for Universal Credit on top of NSESA but not if savings over £16,000 If you haven’t paid NI for the last two years (or had NI credits) then its possible to make a Universal credit claim Seems that the Income Related ESA referred to on .gov.uk is not available to new claimants Universal Credit amounts vary according to circumstances – see https://www.gov.uk/universal-credit/what-youll-get Partners income and savings over £6,000 are taken into account. No UC if savings over £16,000 Can claim without visiting Job Centre Additionally, during the Covid-19 outbreak the Universal Credit minimum income floor rules for Self Employed to be suspended.

All of the above linked to publication of COVID-19 Emergency Bill re start dates – at the time of writing some of the .gov.uk website information is out of date – https://www.gov.uk/government/news/government-outlines-further-plans-to-support-health-and-social-care-system-in-fight-against-covid-19

Support if you are not sick but cannot work due to no customers or working sites being closed

The only possible recourse here is Universal Credit

Universal Credit amounts vary according to circumstances – see https://www.gov.uk/universal-credit/what-youll-get Partners income and savings over £6,000 are taken into account. No UC if savings over £16,000 For duration of Covid-19 outbreak, a claim for UC can be made without visiting Job Centre (precise arrangements for this being implemented at the time of writing) During the Covid-19 outbreak the Universal Credit minimum income floor rules for Self Employed to be suspended See https://www.gov.uk/self-employment-and-universal-credit

Business Rates and Grants

In the Budget of 11 March 2020 a package of Business Rates easements were announced. These have now been extended:

Existing small business rate relief continues to apply, this provides full relief for businesses using a single property with a rateable value of £12,000 or less. A unrestricted business rate holiday applies to retail, hospitality and leisure businesses in England for the 2020/21 tax year (at budget this was subject to a £51,000 Rateable Value cap). Business rates holiday now extended to nurseries. Pubs are given a rates discount of £5,000 – but superseded by the rates holiday in the point above. A £25,000 grant will be provided to retail, hospitality and leisure (RHL) businesses operating from smaller premises, with a rateable value between £15,000 and £51,000. Mention is made of a £10,000 grant for RHL businesses with a rateable value of less than £15,000 but I think this is a duplicate of the general grant scheme – see next bullet point – I don’t think businesses will get both (but I could be wrong). The government will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or Rural Rate Relief (increased from £3,000 in the budget) The grants will be administered by Local Authorities. HMG say “If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority. You do not need to apply. Funding for the scheme will be provided to local authorities by government in early April. Guidance for local authorities on the scheme will be provided shortly.” Isle of Wight Council has a link to start applying for these grants

Business Interruption Loan Scheme

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank to support primarily small and medium-sized businesses to access bank lending and overdrafts.

The government will provide lenders with a guarantee of 80% on each loan. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

Businesses can access the first 6 months of that finance interest free, as government will cover the first 6 months of interest payments.

Eligibility – Your business is UK based, with turnover of no more than £45 million per annum.

The scheme will be available from week commencing 23 March.

Details – Coronavirus Business Interruption Loan Scheme (CBILS)

Support for businesses with paying tax: Time to Pay service

HMRC helpline 0800 0159 559 – “All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.”

Postponement of IR35 Private Sector Changes

HM Treasury have said they intend to postpone the introduction of the Off-payroll working rules to the private sector. The extension of the off-payroll working rules was due to commence on 6 April 2020. The start date is now be deferred to 6 April 2021.

As you can appreciate, the situation is very fluid at the moment and some of the detail on these things is still being worked out. If you would like to discuss any of the above measure though please feel free to get in contact and we will do our best to help.