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Tag: SEISS

SEISS

  • Coronavirus Dates To Remember – Just like yesterday’s Valentine date, make sure you don’t miss them!

    BBLs – Loan – apply by 31 March 2021

    Borrow between £2k and up to 25% of turnover up to £50k, very easily with no fees or security and pay annual interest of only 2.5% after 12m, with no repayments due for the first 12m.

    These remain the best loans a small business will ever receive and must be worth considering. We’re seeing the cash give small businesses valuable breathing space so they can focus on re-grouping and re-launching, as restrictions permit.

    Pay As You Grow improvements announced by the British Business Bank on 6 February, appearing to apply to existing BBLs borrowers, allow repayments to be delayed by a further 6m and after making only one repayment the option to pause repayments for up to 6m.

    This is in addition to the existing choices to extend the loan term from 6 to 10 years and/or pay interest-only up to three times during the loan term.

    CBILs – Loan – apply by 31 March 2021

    Designed for small businesses requiring finance for up to £5m, with no personal guarantees required for loans under £250k and even over £250k your home cannot be taken as security. No fees or interest due for the first 12m. These loans may also be extended to a term of up to 10 years.

    Local Authority Grants – current

    There are six schemes currently available:

    • Closed Businesses Lockdown Payment – from 5 January 2021
    • Local Restrictions Support Grant (Closed businesses) – businesses affected by Tier restrictions from 2 December
    • Local Restrictions Support Grant (Open businesses) – hospitality, accommodation and leisure businesses
    • Local Restrictions Support Grant (Closed businesses) – businesses affected by November and from 5 January national restrictions
    • Local Restrictions Support Grant (Sector) – nightclubs, adult entertainment venues and similar
    • Additional Restrictions Grant – discretionary

    For example, a small local authority discretionary Additional Restrictions Grant may be available to a home based business which has been severely impacted throughout, such as an events business.

    Business Rates Holiday (retail, hospitality & leisure) – to 31 March 2021

    Might this be extended in the Budget? We’ll let you know on 3 March…

    Full or Flexible Furlough – to 30 April 2021 – claim within 2 weeks of each month

    The government continues to pay 80% of furloughed non-working hours, the employer paying only employer NIC and pension contributions. Remember to claim within the specified 2 week date of the month end for each claim. 

    SEISS 4.0 – to 30 April 2021 – claim details due by 3 March 2021

    Details of the fourth self employed grant covering February, March and April are due to be announced by Budget day. 

    VAT Deferral – to 31 March 2021 or up to a further 12m – apply from 23 February

    VAT due between 20 March and 30 June 2020 is due by 31 March 2021 unless you apply to join the new interest-free instalment deferral scheme between 23 February to 21 June 2021.

    VAT Rate Reduction (hospitality & tourism) – 20% to 5% – to 31 March 2021

    This increases gross profit margins helping small businesses deal with other aspects of the virus such as bringing in safety measures or adapting their business model. Another one to look out for on Budget Day.

    Income Tax Returns – extension to 28 February 2021

    Apparently there are still quite a few to be submitted! If 28 February is missed, the usual £100 penalty is due, even if no tax is due, escalating after that for continuing delays.

    Income Tax Deferral – apply before 2 March 2021.

    If you’ve missed the 31 January payment deadline make sure you pay or enter an online deferral agreement before 2 March 2021 [EDIT: NOW AMENDED TO BY 1 APRIL 2021], to avoid a 5% surcharge. If you owe more than £30k in total, you’ll need to contact HMRC to agree a bespoke payment plan – known as Time To Pay.

    Other Taxes -Time To Pay – case by case – as early as possible

    This has always existed for taxpayers in difficulty. Approach HMRC as early as possible to agree a realistic payment plan. 

    Businesses have done well to keep going and many have improved their entire business model for the long term. Make sure you get the help for your long term success while you can.  

  • Coronavirus – Remember, remember the 5th November

    There will be new funding for:

    CJRS – Coronavirus Job Retention Scheme – August version applying to November [EDIT: EXTENDED TO END OF MARCH 2021]

    Employees agree to receive 80% of their reference pay, which the government pays up to £2,500 per month. Their employer pays employer national insurance and pension contributions, and may top up the basic pay beyond 80%. Training, voluntary work or work for another employer may be carried out during a furlough period.

    If there is some work to do, employees may be on flexible furlough, paid in full for the hours worked, with the government payment only applying for non-worked hours.

    Importantly, an RTI submission must have been made by close of 30th October, again emphasising government preference to use up to date information and to help prevent fraud.

    To date, the reference pay has usually been as it was on or before March 2020, with no pay rises expected. As new employees and employers may use this November scheme, the reference pay will need to change perhaps to the amount paid on or before October. We’ll be checking the details when they come out.

    For shareholder-directors on a tax year 2019/20 reference salary of £719 now finding there is no work for them beyond statutory duties, they should be able to claim at least £575.20 for November while paying themselves the 2020/21 recommended £732 monthly salary. Again, we need to see the details in due course.

    Business Grants – Premises based businesses

    Further business grants will be paid for businesses required to close with properties with a rateable value of: 

    • £15k or under, receiving £1,334 per month.
    • Between £15k-£51k, receiving £2,000 per month.
    • £51k or over, receiving £3,000 per month. 

    The reference to a monthly figure clearly suggests this lockdown may last longer than the hoped-for one month!

    Often used to pay rent and utilities, these are essential for businesses who can’t trade at all.

    If you can offer phone or online retails sales for your product or takeaway options for your food, this will help you survive. Together with 5% VAT still applying for takeaways, perhaps you can keep putting those fires out!

    There are also numerous grants for all sorts of businesses, nothing to do with Coronavirus, which may be worth a bit of research.

    SEISS – Already extended

    There was no mention of the self employed grant which was previously extended with a maximum payable for November-December-January of a total £3,750. [EDIT: INCREASED TO £7,500 OR 80% OF PROFITS IF LOWER] With many businesses not being eligible at all so far, such as those with historical profits over £50k, presumably those exclusions need to be revisited as time goes on, as well as the amount, in the light of this lockdown. 

    BBLs – Business Bounce Back Loan – to 30th November [EDIT: 31ST JANUARY]

    Remember, remember not only the 5th November, but the 30th. If you’ve not yet taken out a BBLs loan for up to £50k, you may need to revisit this to help see you through. If so, your application needs to be in by 30th. [EDIT: 31ST JANUARY]

    Businesses should revisit their particular business model, fixed and variable costs and how government, or other, assistance can help them put these fires out!

  • WEP WEP WEP? Winter Economic Plan? Or…

    To add to the self employed (SEISS) and employee (CJRS) grant schemes already introduced, the employee Job Support Scheme (JSS) will start from 1 November, to pick up from the end of the CJRS the previous day, and run for the following six months. In addition, your business will receive the previously announced £1k Job Retention Bonus in February for those staff.

    The SEISS will similarly be extended to cover a further six months to end of April 2021, also at lower amounts, for the self employed.

    There are extensions to VAT and income tax payment due dates and improvements to the BBLs and CBILs terms to help yuor business’ cashflow further.

    Job Support Scheme (JSS)

    As long as employees work at least a third of their ‘usual’ hours, the government and employer will each pay one third of their ‘usual’ pay for their unworked hours, with the government contribution capped at £697.92.

    Meaning that the government will pay up to 1/3 of 67%, being 22% of pay (up to the cap) and the employer pays 55%, being 22% plus the 33% for the hours worked.

    You may be keen to know where the specific £697.92 came from. It seems to derive from a maximum annual reference salary of about £38k, not far off the £37,500 used for the CJRS.

    There isn’t anything to suggest that directors will be treated differently, although we’ll have to wait for further details to know for sure, but clearly on the usual low director salary the JSS has limited value.

    Self Employed (SEISS)

    The current version SEISS 2.0, opened in August 2020, pays a 3 month lump sum of up to £6,570 being 70% of £3,125 of your average profits.

    Today SEISS 3.0 and 4.0 were announced covering November-December-January and February-March-April, respectively. The SEISS 3.0 grant will be for 3 months of 20% of average profits up to a maximum of £1,875.

    This is much lower than before, being just under 30% of SEISS 2.0. Interestingly, this is about 90% of the JSS. Perhaps this is some in-built clawback of previously lower national insurance payments? The SEISS 4.0 grant hasn’t yet been announced.

    SEISS 3.0 and 4.0 are NOT dependent on claiming SEISS 2.0 or SEISS 1.0 (but you do need to be currently eligible).

    Presumably if you were adversely affected, say in August, but business has since picked up, you can’t claim SEISS 3.0 or 4.0. But how to measure ‘reduced demand’ isn’t yet clear. Perhaps a turnover comparison will be required for SEISS 3.0 and 4.0?

    Reduced 5% VAT

    Proving to be valuable to the hospitality and tourism sector, this reduced VAT will now continue beyond mid January to the end of March 2021. Remember this applies to sales of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to attractions. Do check the details if making a claim to recover VAT for subsistence when travelling for business.

    You don’t need to pass this reduced VAT onto your customers, as it may be needed to help keep your staff in their jobs.

    VAT Deferral

    If you deferred your VAT and were expecting to pay it in full by next March 2021, you may now spread that payment over 11 instalments during the 2021/22 financial year to end of March 2022.

    If you want to do this, look out for details on the ‘New Payment Scheme’ which you’ll need to opt into in early 2021.

    Income Tax 31 July 2020 Deferral

    Expected to be due by 31 January 2021, these deferrals already made can enter a plan to pay over a further 12 months, with the final payment due by 31 January 2022. This is only available if your income tax is under £30k.

    If you want to do this, look out for details on the ‘Self-service Time to Pay’ facility.

    Bounce Back Loans – Pay As You Grow

    Borrowers will be offered a delay from 6 years to up to 10 years to repay their loan. You can move to interest-only payments for up to 6 months for up to 3 times and pause repayments entirely for up to 6 months but only once during the term.

    Similarly a loan under CBILs can be extended from 6 years to up to 10 years.

    If you’ve not yet applied for one of these loans, you now have two months until 30 November to do so. Not an easy thing to do for many SMEs, so perhaps these extensions will be persuasive and save some businesses from permanently closing.

    At least, there is no Budget this autumn leaving businesses the time and space to focus on surviving the virus and hopefully thriving in the long run. 

    Please ask your usual On The Spot contact for further assistance. 

  • Coronavirus Grants 2.0 – Finding Your Exit – Small Businesses

    Apart from using the same £2,500 monthly maximum, the two schemes are very different with the self employed now compensated for a maximum of 6 months and employees a maximum of 8 months. This perhaps reflects the fact that the self employed can work as much as possible, but employees cannot work at all or, more likely, the government would prefer employers to take more time to make decisions about redundancies.

    What do I need to know?

    Self Employed (SEISS)

    The current version SEISS 1.0 closes on 13 July 2020 with the new version SEISS 2.0 opening in August 2020.

    The maximum drops from £2,500 per month to £2,187.50 per month, rounded up to a 3 month lump sum of £6,570 being 70% of £3,125 or your average profits, as currently calculated, if lower.

    You can claim both grants or only one: SEISS 2.0 is NOT dependent on claiming SEISS 1.0.

    Presumably if you were adversely affected early on, say in April, where your profits dropped in April, but they have since picked up, you can’t claim SEISS 2.0, but this isn’t yet clear.

    Coronavirus Job Retention Scheme (CJRS)

    June – carries on as now, except any employee who needs to be in a claim from July, must be in a claim in June. With the 3 week minimum, this is an effective last date for newly furloughed employees of 10 June. All claims for June (and presumably earlier) must be made by 31 July.

    July – carries on as now, except employers can choose not to claim for any hours/days employees work paying them their full pay as before the crisis.  

    This could be beneficial for shareholder-directors who may be able to generate good profit for their limited companies in a couple of days but pay themselves only their usual small salary.

    August – as July, except employers must pay any employer’s national insurance (NI) and pension contributions on furloughed pay.

    September – as August, except the government grant to the employer is 70% of pay up to a maximum of 70% of £3,125 = £2,187.50 adjusted for any hours/days worked.

    October – as September, except 70% is now 60%, being a maximum 60% of £3,125 = £1,875 adjusted for any hours/days worked.

    What are the figures for shareholder-directors who can’t work?

    Taking the typical reference salary of £719, the £575.20 current furlough claim will change as follows:

    • June £575.20
    • July £575.20
    • August £575.20 (no NI or pension)
    • September £503.30
    • October £431.40

    Unfortunately, a dividend replacement scheme for shareholder-directors wasn’t announced, with the Chancellor reminding us to use other measures such as business bounceback loans, VAT deferral and income tax deferral. HMRC is also being helpful where companies ask to defer corporation tax under general time to pay provisions.

    Further details on both schemes will be available on 12 June. In the meantime, businesses are still working their way through this, looking for their way out.

    Please ask your usual On The Spot contact for further assistance.

  • Coronavirus – A New World! – Grants For Sole Traders

    The Chancellor today announced probably his final major finance coronavirus package.

    The self employed find themselves in a new world requiring state support when they need very little in normal times. However, many remain excluded and will need to turn to other measures previously announced. 

    What Is The Grant Based On?

    Your grant will be based on 80% of the average of your profits showing in your income tax returns for the 2019, 2018 and 2017 income tax years. 

    How Much Will I get? 

    You’ll get up to £2,500 per month, so you may receive £7,500, assuming the grant runs for the 3 months March, April and May. This seems to be convert into a maximum annual average profit of £37,500.

    How Does Other Income Affect This?

    • If you’ve mostly been living on second property income, with a bit of sole trader income, you’re not eligible.
    • If you’ve earnt more from an employment alongside being self employed, you’re not eligible.

    Helpfully, it appears that you’re still eligible if more than half your income in 2019 was from self employment trading income, but the previous two years it wasn’t.

    What If My Profits Were Over £50k?

    If the average of your profits over the three tax years 2019, 2018 or 2017 is over £50k, you’re not eligible, unless your recent 2019 profit is under £50k. The average of £50k exceeds the average of £37,500 anyway, so this seems to apply in practice to the profits of a partnership. 

    Can I Carry On Working In My Business?

    Unlike furloughed employees, you can carry on running your business and in fact it is a condition of the grant. Your business needs to have been affected by the Coronavirus so that you’ve lost trading profits. We don’t yet know how this will be proved.

    Are Partnerships Included? 

    Yes, partners of trading partnerships will be included in the same way, as long as the partnership’s profit is less than £50k.

    What If I Set Up My Sole Trader Business After 6 April 2019?

    It appears that you won’t be eligible for any grants under this scheme. 

    What About Sole Director-Shareholder Limited Companies?

    Limited companies can benefit from the previously announced furloughed package for employees. It appears that the government is happy for director salary, usually low, to be included. However, this may refer to companies with a few directors where there’s not enough work for all of them.

    We need confirmation where a sole director is carrying out basic director duties until the company’s trade is restored.

    How Do I Apply?

    You need to wait until HMRC contacts you and ‘invites’ you to make an application.

    When Will I Get It?

    The payment will be made in one lump sum in June. Until then, you need to apply for Universal Credit. We don’t yet know whether any Universal Credit payments made will be deducted from the lump sum paid later. 

    Where Does This End Up?

    The Coronavirus has caused a lot of us to change our world view in all sorts of ways.

    Today’s announcement may prove to be the day the Chancellor was given permission to bring in higher taxes for sole traders in the future on the basis that state support requires funding somehow.