In these uncertain times and the rapidly changing nature of the COVID-19 situation, we wanted to continue to reach out to all our clients to let you know we are here to offer support and guidance over the next few months.
We will continue to keep you updated, complete your accounts, VAT, payroll and tax returns in a timely manner. If you and your people are working remotely and / or struggling to keep your records straight then please let us know. We can install a variety of Cloud based solutions to help and if you can scan and email documents to us we can help in posting them.
If you need anything let us know. Our business depends on your business and we must all pull together during the next few weeks.
Further to our COVID-19: OUR BUSINESS CONTINUITY RESPONSE (UPDATE 2), Chancellor has announced additional measures to help businesses and the self-employed impacted by COVID-19; details are as follows.
HELP FOR THE SELF EMPLOYED
You may be entitled to use the Coronavirus Self-employment Income Support Scheme (CSEISS) if you are self-employed or a member of a partnership and have suffered a loss in income due to coronavirus. This scheme will allow you to claim a taxable grant worth 80% of profits up to a cap of £2,500 per month.
Who is eligible?
Self-employed individuals and those who are a member of a partnership. In addition, those eligible must have more than half their income from being self-employed and:
- have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19
- traded in the tax year 2019-20
- are trading when you apply, or would be except for COVID-19
- intend to continue to trade in the tax year 2020-21
- have lost trading/partnership trading profits due to COVID-19
Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:
- having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
- having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period
If you started trading between 2016 -19, HMRC will only use those years for which you filed a Self-Assessment tax return.
There a few individuals who have not submitted their 2018-19 Self-Assessment tax return and to qualify they now have until the 23 April 2020 to do so.
HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.
You will not qualify for this scheme if you’re a director of your own company. However, if you are paid through PAYE you may be able to get support using the Job Retention Scheme.
How much you’ll get
You’ll get a taxable grant which will be 80% of the average profits from the tax years 2016 – 2017, 2017 – 2018 and 2018 – 2019. To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 36 (where applicable) to calculate a monthly amount. It will be subject to a maximum of £2,500 per month for 3 months and will be paid directly into your bank account in one instalment at the beginning of June 2020.
Please note that ‘self-employed trading profits’ have not been clearly defined at present but we assume that this refers to the net profit as shown on the self-assessment tax return for the tax year in question. It is also assumed that ‘income from self-employment’ refers to total income before deducting the taxpayer’s personal allowance and would include all sources of taxable income including employment income, pensions and property income.
In addition, it is unclear at this stage whether loss-making years are to be excluded from the 3 year averaging of trading profits for the purposes of calculating the grant entitlement above.
How to apply
You cannot apply for this scheme yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online. Once HMRC has received your claim and you are eligible for the grant, they will contact you to tell you how much you will get and the payment details.
Government advice: Individuals do not need to contact HMRC now and doing so could delay the work being undertaken to introduce the scheme.
Please note that you will access this scheme only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.
Clearly, these are tough times for all and the government CSEISS support above is not immediately accessible. We cannot know how long this Pandemic will last and what the effects will be on business generally but we suggest considering the following for short tem help while you wait for the CSEISS grant payments in June:
- Coronavirus Business Interruption Loan Scheme (CBILS) – this is new scheme can provide facilities of up to £5m for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow. CBILS supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance. Further details are available from https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
- Universal Credit – Universal Credit is a payment to help with your living costs. It’s paid monthly. You may be able to get it if you’re on a low income or out of work. See https://www.gov.uk/universal-credit for further details. Taxpayers will need to include any CSEISS grant in their income for tax credit purposes.
- Small business grants – the local authorities are supporting small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief through a Small Business Grant Scheme. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs. In addition, the Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property. See details at https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-that-pay-little-or-no-business-rates.
Harmer Slater Limited