November 2020

Coffee shop owners with face masks, lockdown

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Full details have been published on GOV‌‌.UK.  

The rules on who is eligible to claim have changed. However, you will still need to have submitted a Self Assessment tax return for the tax year 2018 to 2019 showing self-employment income in order to claim.  

The third grant, which offers 80% of three months’ average trading profits, paid out in a single taxable instalment capped at £7,500, will be available covering the period from 1 November 2020 to 29‌ ‌January 2021.

Self-employed people who are eligible and in need of support will be able to claim the third grant at any time from 30‌ ‌November 2020 to 29‌ ‌January 2021.  

Who Is Eligible 

To make a claim for the third grant, you must meet a number of conditions, and make an honest assessment about whether you reasonably believe your trading profits will be significantly reduced due to coronavirus.  

As previously, the third grant will also be subject to Income Tax and self-employed National Insurance and must also be reported on 2020 to 2021 Self Assessment tax returns.  

As before, to make a claim for the third grant, you must: 

  • be a self-employed individual or a member of a partnership.
  • have traded in both the tax years 2018 to 2019 and 2019 to 2020.

For the third SEISS grant you must also: 

  • either be currently trading but are impacted by reduced activity, capacity or demand, or have been previously trading but are temporarily unable to do so due to coronavirus  
  • declare that you intend to continue to trade, and that you reasonably believe that the impact on your business will cause a significant reduction in your trading profits
  • only claim if the reduction in profits is caused by reduced business activity, capacity or demand, or inability to trade due to coronavirus – reduction in profits due to increased costs (such as having to buy masks) does not count for this purpose.  

When deciding whether the reduction is significant, you will need to consider your wider business circumstances.

HMRC expect claimants to make an honest assessment about whether you reasonably believe your trading profits will be significantly reduced compared to what you would otherwise expect to achieve during this period. 

The business must have been impacted on or after 1 November 2020. You must keep evidence to show the impact and reduction in your business activity across the qualifying period. 

More Information 

For more information and examples to help you check eligibility to claim, go to GOV‌‌.UK and search for ‘Self Employment Income Support Scheme’. 

HMRC are contacting all self-employed people in the UK that may be eligible to let them know about the third grant.  

There will also be a fourth grant (covering the three-month period from February 2021 to April 20‌‌21).

Originally, the terms of the offer required the deferred VAT to be paid in full by no later than 31 March 2021.

 

However, because of continued tough trading conditions HMRC will allow extra time through a new scheme that it will launch in early 2021.

HMRC will shortly announce further information about the scheme and how to sign up for it.

If you have deferred VAT your options for settling it are:

  • pay in full on or before 31 March 2021
  • opt in to the new VAT deferral payment scheme when it launches in early 2021; or
  • make a “time to pay arrangement” with HMRC.

The new scheme will allow you to settle what you owe over a maximum of eleven monthly instalments ending no later than 31 March 2022. HMRC will not charge any interest over that period. To use the scheme you must be up to date with your VAT returns and be able to pay the deferred VAT by direct debit.

HMRC has confirmed that if you opt in to the new scheme you can still set up a time to pay arrangement for other tax debts. More information on these arrangements is available here.

The scheme allowed businesses to discount their customers’ bills by up to 50% per diner and then the business would reclaim the discounted amount from the government.

Earlier this month, HMRC published guidance on how businesses could make repayments of amounts claimed where:

  • they discovered that they weren’t actually eligible, or that they had overclaimed; or
  • they had simply decided that they wanted to pay the money back voluntarily.

HMRC is writing to some businesses to prompt them to check their claims were correct.

The letter is not a formal enquiry but if you don’t respond within 60 days HMRC is entitled to open one.

If you did overclaim, whether intentionally or not, you will probably be charged a penalty and interest.

It’s best to repay asap – follow the guidance here.

The Bounce Back Loan Scheme (BBLS), launched in May 2020, was introduced to help smaller businesses impacted by coronavirus. It has been extended 31 January 2021.

You can borrow from £2,000 and up to 25% of business turnover (the maximum amount available is £50,000).

No interest payable in the first twelve months

The interest rate for this loan is 2.5% per annum.

No repayments are due during the first twelve months.

Initially the loan period was six years, but this has just been extended to ten.

You Can ‘Top Up’ Your Bounce Back Loan.

This applies to businesses that haven’t already borrowed the maximum amount permitted under the scheme (ie, 25% of total turnover).

This option can only be used once.

It’s been available since Tuesday 10 November from certain lenders, while other lenders will be offering the option soon – use the British Business Bank website to see which lenders are offering top-ups already.

This is how it’ll work:

  • The minimum top-up available is £1,000.
  • You must top-up from your existing BBL lender.
  • The repayment and interest-free period is SHORTER for top-ups – the countdown starts when you originally took out the loan.

You’ll need to contact your lender to apply.

Those businesses affected will be eligible for the following:

  • For properties with a rateable value of £15,000 or under, grants to be £1,334 per month, or £667 per two weeks
  • For properties with a rateable value of between £15,000-£51,000 grants to be £2,000 per month, or £1,000 per two weeks
  • For properties with a rateable value of £51,000 or over grants to be £3,000 per month, or £1,500 per two weeks.

You can apply for CJRS online from today – Wednesday‌‌‌ ‌11‌‌‌‌‌‌‌‌‌ ‌November – for periods from 1 November. You will need to submit any claims for November by 14‌‌ ‌December.

What’s New In The Support Available

  • CJRS has been extended to 31‌‌‌‌‌‌ ‌‌March for all parts of the UK. From 1 November, the UK Government will pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month. The UK Government will review the policy in January.
  • Employers and their employees do not need to have used the scheme before to claim for periods from 1 November. Go to GOV‌‌.UK for full eligibility criteria.
  • HMRC intend to publish details of employers who use the scheme for claim periods from December, and employees will be able to find out if their employer has claimed for them under the scheme.
  • There are now monthly deadlines for claims. Claims for period on/after 1 November must be submitted within 14 calendar days after the month they relate to, unless this falls on a weekend in which case the deadline is the next weekday. For further details go to GOV‌‌.UK and search ‘Claim for wages through the Coronavirus Job Retention Scheme’.
  • The Job Retention Bonus will no longer be paid in February‌ ‌2021 and an alternative retention incentive will be put in place at the appropriate time.
  • The launch of the Job Support Scheme has also been postponed.

What You Need To Do Now

Submit any claims for periods up to 31 October on or before 30‌ ‌November.

Claims for periods up to 31 October will not be accepted after 30‌ ‌November.

Claims are subject to eligibility and the rules in force at the time.

Search ‘Coronavirus Job Retention Scheme’ on GOV‌‌.UK for full eligibility criteria.

What You Need To Do For Your Claims – For Periods From 1 November

  • Read the new guidance – go to GOV‌‌.UK and search ‘Extension to the Coronavirus Job Retention Scheme’ – to check if you are eligible.
  • Agree working hours with your employees you wish to furlough for November and agree any changes to their employment contact.
  • Work out how much you can claim for your employees using the CJRS calculator and examples on GOV‌‌.UK.
  • Submit any claims for periods from 1 November no later than 14‌‌‌ ‌‌December.

Employers will need to keep the records that support the amount of CJRS grant they claim, in case HMRC need to check it.

Employers can view, print or download copies of previously submitted claims by logging onto their CJRS service on GOV‌‌.UK.

The Chancellor is increasing the overall level of the next SEISS grant from 55% to 80% of trading profits.

This grant will cover a three-month period from the start of November until the end of January. The UK Government will pay a taxable grant which is based on 80% of three months’ average trading profits, paid out in a single instalment and capped at £7,500.

The SEISS Grant Extension will last for six months in total, from 1 November 2020 to 30‌‌‌ April 2021. A further grant will cover February to April, as grants will be paid in two lump sum instalments each covering a three-month period.

Full details on checking if you are eligible for the current grant and how to claim will be published on GOV‌‌‌.UK week commencing 23‌‌‌ November.

The CJRS will be extended until the end of March‌‌‌ 2021 for all parts of the UK.

For claim periods running to 31‌‌‌ January 2021, the UK Government will pay 80% of employees’ usual wages for hours not worked, up to a cap of £2,500 per month.

The UK Government will review the policy in January to decide whether economic circumstances are improving enough to ask employers to contribute more.

It was also confirmed that the Job Retention Bonus will no longer be paid in Feb‌‌‌ruary 2021, as CJRS will be available at that time. An alternative retention incentive will be put in place at the appropriate time.

What You Need To Do Now

If you intend to claim under the CJRS, please check if you’re eligible to claim, and what you need to agree with your employees. You can find this on GOV‌‌‌.UK by searching ‘Extension to the Coronavirus Job Retention Scheme’.

This latest information applies for CJRS claim periods from 1 November 2020. The final date for claims for the period up to 31 October is still 30‌‌‌ November 2020.

The full guidance for claims from November onwards, including more information on how to calculate a claim, will be published on GOV‌‌‌.UK on Tuesday. Claims can be made from 11‌‌‌ November 2020.

Chancellor Rishi Sunak has announced that the furlough scheme will be extended until the end of March.

Payments are set to remain at 80% of employee’s wages.

Sunak also announced a doubling of the self-employment grant to 80%, worth up to a maximum of £7,500, for December and January.

SEISS grants will be paid faster – you will be able to make a claim via HMRC’s site from 30 November rather than 14 December, as originally planned. The previous HMRC site for claiming SEISS grants has been closed. A new one will be available on 30 November.  The grants can be claimed by self-employed individuals and members of partnerships whose income has been adversely affected by coronavirus.

The latest extension to support measures will be reviewed in January, however, to “decide whether economic circumstances are improving enough to ask employers to contribute more”.

The Bank of England (BoE) has unveiled it will give the UK economy a further £150bn in crisis support and keep interest rates at a record low.

The interest rate will be maintained at an all time low of  0.1%, a move which dampened months of speculation that the BoE would introduce negative interest rates in a bid to salvage the UK economy.

The opening of the service has been brought forward from 14 December to 3‌0 November.

How Will It Work?

The SEISS Grant Extension provides support to the self-employed in the form of two grants, each available for three-month periods covering November to January and February to April.

Grants will be paid in two lump sum instalments each covering a three-month period.

The first grant will cover a three-month period from the start of November until the end of January. The UK government will provide a taxable grant covering 55% of average monthly trading profits, paid out in a single instalment covering three months’ profits, capped at £5,160 in total.

The grant will be increased from the previously announced level of 40% of trading profits to 80% for November. This therefore increases the total level of the grant from 40% to 55% of trading profits for November to January.

The second grant will cover a three-month period from the start of February until the end of April. The UK government will review the level of the second grant and set this in due course.

The grants are taxable income and subject to National Insurance contributions.

Who Is Eligible?

To be eligible for the scheme, self-employed individuals, including members of partnerships – must:

  • have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants)
  • intend to continue to trade and either:
    • are currently actively trading but are impacted by reduced demand due to coronavirus
    • were previously trading but are temporarily unable to do so due to coronavirus.

Please search ‘Self-Employment Income Support Scheme Extension’ on GOV‌.UK for further information.

The new Job Support Scheme, which was due to start on Sunday 1 November, has been postponed.

The Coronavirus Job Retention Scheme (CJRS), which was due to end on 31 October, will now be extended, with the UK government paying 80% of wages for the hours furloughed employees do not work, up to a cap of £2,500 for periods from 1 November.

Employers will need to pay all employer National Insurance Contributions (NICs) and pension contributions.

They can choose to top up their furloughed employees’ wages beyond the 80% paid by the UK government for hours not worked, but they are not required to do so.

There will be no gap in support between the previously announced end date of CJRS and this extension. For more information, go to GOV‌.UK and search ‘furlough scheme extended’.

How Will It Work?

You clients will have flexibility to ask your employees to work on a part-time basis and furlough them for the rest of their usual working hours, or furlough them full-time. You will have to cover their wages for any hours they work as well as all employer National Insurance and employer pension contributions.

You clients will be able to claim either shortly before, during or after running your payroll. There will be a short period initially when the online claims service will be closed while HMRC update the system, and you will be able to claim in arrears for that period.

Further details will be provided in the next few days. Please do not call HMRC for more information in the meantime.

How To Check If Your Employees Are Eligible

Employers can claim for employees who were on their PAYE payroll on 30 October 2020. Your clients must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March and 30 October 2020, notifying a payment of earnings for that employee.

If employees were on an employers’ payroll on 23 September 2020 (i.e. notified to HMRC on an RTI submission on or before 23 September) and were made redundant or stopped working for them afterwards, they can also qualify for the scheme if they re-employ them.

Neither the employer nor the employee needs to have previously used the CJRS.

 What You Need To Do Now

  • Check if your employees are eligible for the scheme, based on the information above.
  • Agree working hours with your employees, so they know if they are furloughed fully or part-time during November.
  • Keep the records that support the amount of CJRS grant you claim, in case HMRC need to check it. You can view, print or download copies of your previously submitted claims by logging onto your CJRS service on GOV‌.UK.