In case you missed today’s newsletter, here are our latest advice to our clients and friends with updates to announcements already made by the Chancellor and commented on previously by ourselves.
HELP FOR THE SELF EMPLOYED
In an attempt to convince the self-employed that they were not being forgotten, the Chancellor has announced a new support package designed to cover around 95% of the self-employed.
Details are now awaited but we have the outline of how this business sector will benefit. Eligibility will be conditional.
- Firstly, this is designed to be specifically targeted for those who are reliant on self-employment, as opposed simply being for anyone who is self-employed. Accordingly it applies where the majority of income is from self-employment. It remains however to be seen how this works. For example take someone who for a non-Covid-19 genuine reason their last reported profit from self-employment was low, or even generated a loss. That may mean the majority of income is not from self-employment.
- Secondly, a tax return for the year ended 5 April 2019 needs to have been filed. For those who have not yet filed the 2018/19 tax return a 4-week extension from yesterday is now granted. This is to ensure only those with a genuine self-employment history can participate.
- Thirdly, it will be available to anyone making a trading profit of up to £50k. This has a possible twist. The 2018/19 tax year encompasses a range of trading year ends – in theory everything from 6 April 2018 to 5 April 2019. So potentially someone who last drew up accounts almost two years ago could be prejudiced by having a profit of £51k compared to what may have happened in the year to April 2019 or indeed now.
This Self-Employed Income Support Scheme will pay a grant of 80% of average monthly profits over the last three years, up to £2,500 per month.
So, for someone who has average annual profits of £50k, or £4,167 per month, they will receive £2,500. This is the same as someone who has average annual profits of £37,500, so it’s not entirely clear why the £50k cap. Except that the average earnings of those above £50k are stated to be £200k
The scheme will run for an initial three months. In contrast to the treatment of furloughed employees, to the extent that it remains possible, which is probably unlikely, the grant can be claimed as well as continuing to do any business.
This grant however comes with a few stings and a warning.
- Firstly, the grant will be taxable. In theory this is designed to replace lost profits, so perhaps this stance is understandable. At least there is no deduction at source, and under normal self-assessment procedures, any tax on this is only likely to be paid in January 2021 or July 2021 at the earliest.
- Secondly, due to the complexity of running such a scheme, and ensuring any exposure to abuse is minimised, access to the grant is unlikely to be available prior to the beginning of June. HMRC will contact relevant individuals and will make payments directly following on from that. Nonetheless June seems a long, long time away.
- Thirdly, The Chancellor made a clear suggestion that National Insurance is likely to rise for the self-employed in the future, as the inconsistencies in status between employees and the self-employed is looked at and sought to equalise.
So some good news for the self-employed but the long wait until June is worrying. In the meantime, applications for for Universal Credit can be made with a guarantee that it should not take the usual 5 weeks for money to come through. The advance payment system should allow funds to be paid within ‘days’.
CORONAVIRUS JOB RETENTION SCHEME
- There are still many more questions than answers at this stage.
- However, yesterday Government published further guidance on who can be furloughed, how and when. READ MORE HERE
- Please note that payments under this scheme will be taxable.
HMRC TIME TO PAY HELPLINE
- We are seeing HMRC automatically upon request deferring PAYE payment for 3 months.
- HMRC have announced a new phone number of 0800 024 1222 which should now be used
- Whilst this is automatic, Government are advising taxpayers to cancel your direct debit.
- VAT returns still need to be submitted in the normal way. If you are in a repayment situation, we recommend you submit your VAT return as soon as you can after your VAT quarter end.
- To reread our original analysis, click HERE
- The 100% discount for 20/21 year for certain public facing businesses ( including travel agents,bars and restaurants) is in place and being activated by Local Authorities. Expanded guidance on qualifying business types has been issued and can be found HERE
- There is no cap on rateable value, so applies to all business sizes.
- The Retail and Hospitality Grant Scheme for smaller businesses (10k where rateable value is under 15k, 25k where rateable value is between 15k and 51k; nothing for rateable values in excess of 51k) is automatically run by Local Authorities. We are hearing that some Local Authorities have begun to contact relevant companies. There may be a lack of consistency and speed of delivery across different Local Authorities.
CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME (CBILS)
- This is up and running, but we are hearing mostly negative stories at the moment. Government needs to direct the Banks to make available loans to Companies. We are seeing 100% personal guarantees being required, which in a situation where we don’t know how long the Coronavirus restrictions will last for and what a recovery could look like, no reasonable owner should give. This requirement needs to be removed as soon as possible.
- Hopefully, we will see some standard approaches emerging from the Banks…at the moment, the major banks are applying the criteria differently, and that next week these emergency loans will become easier to access.
- It also appears that most banks are “not open” for new business at this time.
PACKAGE TRAVEL REGULATIONS
- Despite being expected much earlier this week, no announcement has yet been made by Government regarding amending the Regulations around the requirement to repay a 100% refund in cash within 14 days of cancellation. We await this announcement as does the entire Travel Industry
ELMAN WALL WEBINAR
- Over the last 10 days we have participated in and presented on many virtual meetings for Trade Associations.
- We are now arranging a Zoom call for our own clients and friends to be held on Thursday 2 April at 2:30PM.
- We will cover latest news and updates on the various Government announcements and schemes, including those listed above.
- An invitation email will be sent out early next week.