Here is our summary of all the information currently available about this scheme to help the self-employed.

Who qualifies:

You can apply if you are self-employed or in a partnership.

Directors of limited companies, even if you are the only person in the company, are not self-employed, and you do not qualify for this support.

To qualify, you must meet ALL the following criteria:

• Have traded in the 2019-20 tax year
• Still be trading when you apply (or would be, if it were not for CV-19) and intending to continue to trade in 2020-21
• Have suffered a reduction in profit due to CV-19
• Have submitted your 2018-19 tax return. This was due to be filed by 31 January 2020.  If for some reason, you have not yet done so, you have 4 weeks now to get it in – before 23 April 2020.

What income do I need to have had to qualify?

Your self-employed trading profit must be less that £50,000 and more than HALF of your total income must come from your self-employment.

This is worked out by at least one of the following 2 conditions being true:

• Your trading profit in 2018-19 was less than £50,000, and these profits were more than half your total taxable income in 2018-19
• Your AVERAGE trading profits in 2016-17, 2017-18 and 2018-19 were less than £50,000, and these profit were more than half your average total income in the same period. (If you have been trading for less than 3 years, you use the length of time you have been trading instead)

It is presumed that HMRC will take the figures from your previously submitted tax returns to work our your eligibility, so you can check your SA302’s if you need to check your eligibility.
(SA302 is the tax calculation sent to you with your tax return)

How much will I get?

You will get a taxable grant which will be 80% of the average profit for the tax years:

• 2016-17
• 2017-18
• 2018-19

HMRC will add up the trading profit for 3 years, divide by 3 and use this to calculate a monthly amount.  The maximum will be £2,500 for 3 months.

It will be paid into your bank account in one instalment.

It is important to note that this is a taxable grant, so although it does not need to repaid, it will go as income on your 2020-21 tax return.  If you claim tax credits, you’ll need to include the grant in your claim as income.

When Will I Get It?

This is the contentious issue at the moment.  HMRC have said the money should be available in early June.

This is not HMRC being difficult or delaying on purpose.  It would normally take months of planning, if not years, to set up this system, and HMRC are trying to do it a few weeks.

How do I Apply?

YOU DON’T.

HMRC already have your tax returns and they will contact you if you are eligible for the scheme.  You will then complete some details online and subject to final checks, the money will be paid into your bank account.

Summary

This is a massive help for 95% of the self-employed.  As with all schemes, it doesn’t work for everyone.  Anyone starting self-employment since 6 April 2019 is not covered, nor is anyone who has been self-employed, but now made the transition to a limited company.
Businesses that have grown in 2019-20 will not have these increased profits taken into account when calculating the payments due.  But for many, it is the help that was being requested.

If you require any more information about the scheme, or other help that may be available to you in these difficult times, then please get in touch with Rosie Forsyth at Wilkins & Co.

We have put together a summary of measures introduced over the last week aimed at helping you get through this period, and highlighted any actions that you may wish to take.

This will be updated as more information becomes available, especially in regard to any help being announced for the self-employed.

As you may expect, much of the detail has not yet been made available, but this is what we know so far…….

Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been made redundant during this crisis.

The scheme will cover the cost of wages backdated to 1 March 2020 and funds should be available before the end of April. It will continue for at least three months, and can include workers who were in employment on 28 February.

To access the scheme:

• you need to designate affected employees as ‘furloughed workers’, and notify employees of this change. “Furloughed” means that the worker is allowed to be absent temporarily from work. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation; and
• submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC will set out further details on the information required.
• HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.

It is really important to note that to qualify for this scheme the furloughed workers should not undertake ANY work for you during this period.

While HMRC is working urgently to set up a system for reimbursement, it is not ready yet, and funds will not be available until the end of April.

There are no details yet how this may apply to family members on the payroll, directors etc.

ACTION:

If you need to reduce staffing during this period, can you use the scheme? Has anyone been made redundant already that could now be furloughed? 

Statutory Sick Pay

• SSP is now available from the first day of absence from work, rather than the previous rules of day 4
• The current rules surrounding eligibility for SSP have not changed, so only workers earning on average over £118 per week are eligible
• SSP is currently £94.25 per week and can be paid for a maximum of 28 weeks
• Those who are self-isolating and who cannot work, even if they themselves are not sick, are eligible for SSP.
• Employers will be able to reclaim 2 weeks of SSP for employees who are off work or self-isolating due to COVID-19.

ACTION:

Make sure your staff are aware of your sick pay policy and what they need to do should they have to self-isolate.

VAT 

The next quarter of VAT payments can be deferred.  The deferral will apply for periods ending between 20 March 2020 until 30 June 2020.  You will have until the end of the 2020-21 tax year to get your payments up to date.  There will be no penalties etc for not paying your vat in this period.

VAT refunds will continue to be paid as normal.

The deferral is automatic and businesses do not need to apply for it.

ACTION:

Don’t pay your next VAT payment, though your return should be submitted as normal.  If payment is usually by Direct Debit, make sure you cancel this with your bank.

Income Tax payments

All income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.

There is no need to apply for this deferral – it will be applied automatically. No penalties or interest for late payment will be charged in the deferral period.

ACTION:

Do not pay your self-assessment payment on account bill that was due at 31 July 2020.

Business Rates and cash grants

• No rates payable for the 2020-2021 tax year for any business in the retail, hospitality or leisure sectors.
• In those sectors, if your rateable value is between £15K and £51k, you’ll also receive a cash grant of up to £25,000 per property.
• Any business which gets small business rates relief, including those in the retail, hospitality or leisure sectors, will receive a cash grant of £10,000
• This help will be administered by local authorities and should be delivered automatically, without businesses needing to claim.

ACTION:

The rates holiday is automatic, so no action is needed from you.

 HMRC Time to Pay

HMRC’s Time to Pay scheme can enable firms and individuals in temporary financial distress as a result of Covid-19 to delay payment of outstanding tax liabilities. HMRC’s dedicated Covid-19 helpline provides practical help and advice on 0800 0159 559.

ACTION:

If you have any tax bill due that you are going to struggle to pay, call HMRC in advance.

Coronavirus Business Interruption Loan Scheme

• These will be available from Monday 23 March and are delivered all the major banks. The lender receives a guarantee of 80% of the loan amount from the government.
• The loan period can be for up to 10 years. The borrower remains liable for 100% of the debt.
• No interest will be charged for the first 12 months. Interest rates offered on these loans are likely to be high, as they are high -risk loans for the bank.  Overpayment will be permitted to repay the loans early if possible
• Banks will require financial statements, management accounts and cashflow forecasts as they would for any normal loan.

ACTION: 

If you think you may wish to apply for this loan, contact us so can make sure your accounts are up to date and can help you with a cashflow forecast.
We can put you in touch with a great commercial loans advisor to talk through your options if you are considering taking out a business loan.

We will update this blog as and when more information becomes available.

Please contact us if you want to discuss your accounts and finances at this difficult time.

Just a quick blog from me to let you know how we are currently working at Wilkins & Co.

Most of our work can be done remotely and I have a separate office at home, so while there is no such thing as business as normal at the moment, we are continuing as best as we can.  My kids are home like everyone else’s so I am dealing with teenagers around the house – and the girls who work with me are also working from home, juggling with their new role as teaching assistants too.

I am still on the end of the phone – if we’d normally meet up, then please do call over the phone or via a video call.  Interrupted calls to deal with children is absolutely no problem at all.  Don’t ask me too many complicated maths questions though – after about year 5!

If anyone needs to drop anything off, please give me a call and let me know you are coming.  Apart from walking the dog (who is going to be fitter than ever!) I will be here and you can drop stuff off on the doorstep.

It is obviously a worrying time and I understand that you have very serious concerns at the moment.  You can call me and chat about your business and finances any time you need to. Hopefully we will get some clarification soon from the government on help available to small businesses and I will sharing as much information as I can with you all.

Now more than ever it is important to support local businesses and we will be doing what can to buy local, support small business and help our local community.  Our social media will continue as this is a great way to stay in touch and keep connected with the outside world.

And when you really can’t think of anything else to do- why not make a start on your tax return?

With best wishes and virtual hugs

Rosie

With the tax year ending soon have you been as tax efficient as you could have been this tax year?

What can you still do before the year end to maximise your tax efficiency?

Here are a few of my tips for tax efficiency:

• Use your personal allowance – everyone has a personal allowance of £12,500 for this tax year.  Consider family members who have no other income and if their allowance can be utilised.
• If you have a new limited company, have you taken a salary this year?  Low levels of salary may be able to be processed without the need to set up a PAYE scheme with HMRC, but generally you will need to register as an employer with HMRC to be able to pay yourself a salary from the company – you just about have time to do this before 5 April.
• If you have a limited company –have you paid dividends this year?  The dividend allowance is still £2,000, so the first £2,000 of dividend received in a tax year is tax-free, and then for basic rate taxpayers, the rate of tax on dividends is 7.5%.  Dividends must be paid out of available reserves and are payable per share -so if you have more than one shareholder in the company, you need to get the maths right!
• Check you and your partner’s total income for the year if you receive child benefit payments.  If you have the ability to determine your income for the year, by varying the level of dividend paid, keeping the higher earner’s income below £50,000 will ensure you retain your child benefit.  If one of you has earned more than £50,000 this year, be aware you will need to pay back some or all of your child benefit and may need to complete a tax return to do this.
• If you are considering buying capital equipment for your business, doing if before the end of the tax year will give you the tax deduction this year rather than next
• Pension contributions – very tax efficient for the company to contribute to your personal pension.  Review any payments made in the year and take advice from an IFA.
• Also think about contributing up to £3,600 into a pension scheme for a spouse, civil partner or a child, even if they have no earnings of their own, to obtain basic rate tax relief on the contributions
• If you have taxable income over £100,000, you will start to lose your personal allowance, and will receive no personal allowance once your income is over £125,000 – this makes your marginal tax rate 60% on this part of your income.  Consider making additional pension contributions or gift aid donations which may restore your personal tax allowance
• Use your allowance for tax free ISA saving; that’s up to £20,000 in this tax year. Under 18s can save £4,386 in a Junior ISA.  Also consider LISA’s to help your children get on the housing ladder.

Often simple steps can be taken to minimise your tax bill.  You should always however take professional advice to ensure the best tax saving strategy for you and your business.

Please contact us at Wilkins & Co if we can help you ensure that you and your business and operating as tax efficiently as possible.

Please click here to read our summary of yesterday’s Budget.

Budget summary 2020