The Covid-19 pandemic has affected individuals and businesses alike, and the Government have put various support measures in place. It is important that you do not miss the deadlines for claiming help under the various schemes; and also that you understand how grants received are treated for tax and National Insurance purposes.
CORONAVIRUS JOB RETENTION SCHEME
The Coronavirus Job Retention Scheme enabled employers to keep staff on the books by furloughing them and claiming a grant from the Government to pay the employees 80% of their wages (capped at £2,500 per month) while on furlough. Until the end of July 2020, employers could also claim the associated National Insurance and minimum employer pension contributions due under auto-enrolment back from the Government. Claims for grants for the first phase of the scheme, which ran to 30 June 2020, had to be made by 31 July 2020.
In the second phase of the scheme, which runs from 1 July 2020 to 31 October 2020, employees can come back to work part time, while being furloughed for the remainder of the time, with the employer claiming a grant under the CJRS for the employee’s furloughed hours.
The scheme comes to an end on 31 October 2020. As the scheme winds down, the amount that employers can claim is reduced to 70% of the employee’s pay (capped at £2,187.50 per month) for September and to 60% of the employee’s pay (capped at £1,875) for October. However, furloughed employees must continue to be paid 80% of their pay while furloughed up to the equivalent of £2,500 a month, with the employer making up the difference.
Claims for the second phase of the scheme must be made by 30 November 2020.
Grants received under the CJRS are taxable and should be taken into account when working out your taxable profits.
Speak to us to check that you have claimed what you are entitled to under the scheme and to understand how to treat the grant payments for tax purposes.
CORONAVIRUS JOB RETENTION BONUS
To encourage employers to retain furloughed employees, employers will receive a bonus of £1,000 for each furloughed employee who remains continuously employed until at least 31 January 2021, as long as the employee is paid, on average, at least £520 per month in November 2020 to January 2021. Claims for the bonus can be made from February 2021.
Speak to us to find out how you can benefit from the bonus.
THE JOB SUPPORT SCHEME
The Job Support Scheme provides different types of support to these businesses so they can get the assistance according to their situation. Businesses that are open but facing decreased demand can get support for wages through “JSS Open”. Those businesses that are legally required to close their premises as a result of coronavirus restrictions set by one or more of the four governments of the UK can get the support through “JSS Closed”.
This policy paper sets out details on eligibility criteria, conditions and timescales for making claims under the Job Support Scheme. Reflecting the different types of support being provided through the scheme, this paper details specific eligibility criteria for JSS Open and primary criteria for JSS Closed, followed by eligibility criteria and conditions for the whole scheme.
The JSS starts on the 1 November 2020 and runs for 6 months, until 30 April 2021. The government will review the terms of the scheme in January. Employers will be able to claim in arrears from 8 December 2020, with payments made after the claim has been approved. Neither the employer nor the employee needs to have benefitted from the Coronavirus Job Retention Scheme to be eligible for the Job Support Scheme.
Employers will be able make their first claim from 8 December 2020 on GOV.UK. Employers will be able to claim from 8 December, covering salary for pay periods ending and paid in November. Subsequent months will follow a similar pattern, with the final claims for April being made from early May.
Agents who are authorised to do PAYE online for employers will be able to claim on their behalf.
Further guidance on the steps that employers need to take to calculate and make a claim to the Job Support Scheme will be published by the end of October.
DEFERRED JULY 2020 SELF ASSESSMENT PAYMENT
To help those affected by Coronavirus, taxpayers could delay paying their second self-assessment payment on account for 2019/20, which normally would have been due by 31 July 2020. Under the original proposals, the deferred tax was due to have been paid by 31 January 2021. However, it has now been announced that self-assessment taxpayers who need more time to pay will be able to spread their outstanding tax bill over 12 months from January 2021.
It should be noted that other liabilities will fall due within this period, and it will be necessary to budget for these, as well as any deferred tax which has to be paid.
Speak to us to find out what your tax liabilities are so you can budget for your payments.
PAYING DEFERRED VAT
VAT-registered businesses were able to defer VAT due between 20 March 2020 and 30 June 2020. The deferred VAT is due to be paid by 31 March 2021. However, under the New Payment Scheme, payments can instead be made in equal instalments up to 31 March 2022 VAT due after 30 June 2020 must be paid in full and on time as normal.
Speak to us to find out what you need to pay and by when.
STRUGGLING TO PAY TAX?
If you are struggling to pay the tax that you owe in full and on time, help is available. You can set up a time to pay arrangement with HMRC, which will allow you to spread the payments over a number of months.
Speak to us to find out how this can be done.
CLAIM BACK SSP FOR CORONAVIRUS-RELATED ABSENCES
Employers who had fewer than 250 staff on 28 February 2020 can claim back up to two weeks’ statutory sick pay paid to employees who were absent from work due to Coronavirus. This covers absences where the employee had Coronavirus, was self-isolating because someone in their household had symptoms or was shielding. SSP paid to an employee while self-isolating prior to surgery can also be reclaimed.
Employees who are absent due to Coronavirus must be paid SSP from the first day that they are off – they do not need to serve the three waiting days first.
Speak to us to find out whether you can reclaim SSP.
There are various loans and grants available to help businesses survive the Covid-19 pandemic. The available support includes Bounce Back loans of between £2,000 and 25% of turnover, to a maximum of £50,000.
Speak to us to find out what help is available and how loans and grants are treated for tax purposes.
RELIEF FOR LOSSES
If your business has been adversely affected by the Covid-19 pandemic and you think that you might have made a loss, it is important that you claim relief for that loss and use it in the most effective way.
Depending on how you prepare your accounts, there are various options available for relieving a loss. If you have decided to close your business and made a loss in the last year of trading, you can look to carry the loss back under the terminal loss relief rules. This may generate a handy tax repayment.
Speak to us to find out how you can obtain relief for business losses.
MAKING TAX DIGITAL
Making Tax Digital (MTD) requires taxpayers to maintain electronic records and ‘communicate’ with HMRC digitally. Now is the time to look ahead and prepare for the next stages of the MTD programme.
MTD FOR VAT
VAT-registered businesses whose turnover is in excess of the VAT registration threshold of £85,000 are already within MTD for VAT and must keep digital records and file their VAT returns using MTD-compatible software. The requirement for links between different stages of the process, for example, from the records to the return, to be fully digital has been delayed – it was due to take effect from April 2020, but will now apply for VAT return periods starting on or after 1 April 2021.
While it is currently acceptable to cut and paste information from one application to another, for new VAT return periods starting on or after 1 April 2021, the links must be digital. This means, for example, using linked cells in spreadsheets, exporting, downloading and uploading files, automated data transfer or using a single API-enabled software package. HMRC have, however, promised a ‘soft landing’ as regards the imposition of penalties.
Where an employer provides a company car, but the employee pays for the fuel, the employer may pay a mileage allowance for business journeys. HMRC accepts that payments not exceeding the ‘advisory fuel rates’ are reimbursements of expenses, not subject to income tax or Class 1 national insurance contributions.
These rates may be used to reclaim input VAT in respect of fuel used for business journeys (remembering that VAT receipts to cover the amount claimed are required). These rates are scheduled to change quarterly and the current rates can be found at: https://www.gov.uk/government/publications/advisory-fuel-rates.