17th March 2021
We’ve created an easy to read contractor’s fact sheet to the temporary package set out by the Government to support struggling businesses in this period of disruption caused by COVID-19.
Job Retention Scheme (Extended until the end of September 2021)
The government’s Coronavirus Job Retention Scheme (CJRS) – also known as the Furlough scheme – has been extended until the end of September 2021.
The UK Government will continue to pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month, up to the end of June 2021.
For periods in July, CJRS grants will cover 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50. In August and September, this will then reduce to 60% of employees’ usual wages up to a cap of £1,875.
Employees have to be paid 80% of their usual wages for the hours they do not work up to a cap of £2,500, so businesses will have to fund the difference between this and the grant amount received.
Businesses will also have to continue to pay the associated Employer National Insurance contributions and pension contributions on subsidised furlough pay from their own funds.
Self-Employment Income Support Scheme (Fourth Grant)
Claims for the third SEISS grant have now closed. The last date for making a claim for the third grant was 29 January 2021.
The fourth grant from late April 2021
At the Budget, it was confirmed that the fourth SEISS grant will be set at 80% of 3 months’ average trading profits, paid out in a single instalment, capped at £7,500.
The fourth grant will be open to those who became self-employed in the tax year 2019 to 2020. The rest of the eligibility criteria remain unchanged.
The eligibility for the scheme will now be based on a submitted 2019 to 2020 tax return. This may also affect the amount of the fourth grant which could be higher or lower than previous grants received.
Who can claim
To be eligible for the fourth grant you must:
- be a self-employed individual or a member of a partnership
- have traded in the tax year 2019 to 2020 and submitted your tax return by 2 March 2021
- have traded in the tax year 2020 to 2021
- be currently trading but are impacted by reduced demand due to coronavirus
- have been trading but are temporarily unable to do so due to coronavirus
You must also declare that:
- you intend to continue to trade
- you reasonably believe there will be a significant reduction in your trading profits due to reduced business activity, capacity, demand or inability to trade due to coronavirus
To work out your eligibility HMRC will first look at your 2019 to 2020 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.
If you’re not eligible based on your 2019 to 2020 Self Assessment tax return, HMRC will then look at the tax years 2016 to 2017, 2017 to 2018, 2018 to 2019 and 2019 to 2020.
What the fourth grant covers
The fourth grant will provide a taxable grant calculated at 80% of 3 months’ average trading profits. The fourth grant will be paid out in a single instalment and capped at £7,500 in total.
How to claim
The online service for claims is now open and you must make your claim for the fourth grant on or before 1 June 2021. HMRC will contact eligible individuals in mid-April to give them a personal claim date. This will be the date that you can make your claim from.
Statutory Sick Pay (SSP)
This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because:
- Employers with fewer than 250 employees will be eligible (number of people they employed as of 28 February 2020).
- Employees will not need to provide a GP fit note.
- The weekly rate is £95.85. If you’re an employer who pays more than the weekly rate, you can only claim up to the weekly rate paid.
- There is a calculator on the Government’s website to work out how much you can claim.
- Coronavirus-related Statutory Sick Pay can be claimed online here.
- Further details on the scheme can be found here.
From 8 June 2020, some people entering or returning to the UK will be required to quarantine for 14 days. If an employee is unable to work during this period, they will not qualify for SSP unless they also meet one of the above criteria.
As one of the Government’s coronavirus (COVID 19) supporting measures, Self Assessment taxpayers were given the option of deferring payment of their July 2020 Payment on Account until 31 January 2021.
If you deferred this payment, you may have had these 3 payments to make on 31 January 2021:
- your deferred July 2020 payment on account (if it remains unpaid)
- any 2019 to 2020 balancing charge
- your first 2020 to 2021 payment on account
If you had difficulty paying your Self Assessment tax bill
You can set up a payment plan to spread the cost of your latest Self Assessment bill if:
- you owe £30,000 or less
- you do not have any other payment plans or debts with HMRC
- your tax returns are up to date
- it’s less than 60 days after the payment deadline
You do not need to contact HMRC if you set up a payment plan online.
Late payment penalties are charged when tax remains unpaid for 30 days, 6 months and 12 months after the payment due dates. You can avoid the penalties if you enter into a Time to Pay arrangement before they become due and you pay all the tax owing under that arrangement on time.
For Self Assessment payments that were due on 31 January 2021, you will avoid the first late payment penalty if you set up a Time to Pay arrangement by 2 March 2021. The 6 month and 12-month penalties can be avoided if you pay all the tax owing under that arrangement on time.
VAT payments due 20 March 2020 to 30 June 2020 could be deferred until 31 March 2021 (continue to pay normally after the deferral period ends). This is available to all VAT registered businesses, without the need to apply – simply hold back VAT payment.
It is important to note that this is not a grant; businesses still need to pay the full amount before 31 March 2021. The deferral does not cover payments for VAT MOSS or import VAT. Find out how to defer your payments here.
Businesses that deferred VAT between 20 March and 30 June 2020 and still have payments to make, can:
- pay the deferred VAT in full on or before 31 March 2021
- opt in to the online VAT deferral new payment scheme (see below)
- contact HMRC if you need more help to pay
If you cannot afford to pay by 31 March this year, you can now use the online VAT deferral new payment scheme to spread your payment.
The new scheme lets businesses pay their deferred VAT in equal monthly instalments, interest-free. Payments can be spread across a number of months depending on when they join – the earlier they join, the more months they have to spread their payments across.
- 11 instalments if you joined by 19 March
- 10 instalments if you joined by 21 April
- 9 instalments if you joined by 19 May
- 8 instalments if you joined by 21 June.
You can join the scheme quickly and simply online without the need to call HMRC. To find out more information, including the things you need to do before joining, go to GOV.UK and search ‘VAT deferred’.
The online service will close on 21 June 2021.
Bounce Back Loan Scheme (BBLS)
The scheme helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.
The government guarantees 100% of the loan, and there are no fees or interest to pay for the first 12 months. After 12 months, the interest rate will be 2.5% a year. The scheme is open to applications until 31 March 2021.
If you already have a Bounce Back Loan but borrowed less than you were entitled to, you can top up your existing loan to your maximum amount. You must request the top-up by 31 March 2021.
You can apply for a loan if your business:
- is based in the UK
- was established before 1 March 2020
- has been adversely impacted by the coronavirus
The length of the loan is 6 years, but you can repay early without paying a fee. No repayments will be due during the first 12 months.
Time To Pay Service
All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.
Every UK based business that pays tax to the UK Government and has outstanding tax liabilities are eligible.
If you have missed a tax payment or you might miss your next payment due to COVID-19, call HMRC’s dedicated helpline: 0800 024 1222.
Business Interruption Loan Scheme
The scheme will help small and medium-sized businesses access loans and other finance up to £5 million. The government guarantees 80% of the finance to the lender and pays interest and fees for the first 12 months. The scheme is open to applications until 31 March 2021.
Depending on the type of finance applied, loan terms will be up to 3 years for overdrafts and invoice finance facilities, and up to 6 years, for loans and asset finance.
117 lenders are participating in the scheme, including many of the main retail banks. Find a lender and their contact details via this link.
Depending on the size of the loan lenders may ask for the following supporting documents:
- management accounts
- cash flow forecast
- business plan
- historic accounts
- details of assets
The lender will check that the loan is:
- for a suitable business purpose
- affordable for the business
- the right type of finance for the business
The lender will decide whether to offer a loan, or another type of finance and the business will be responsible for repaying 100% of the amount borrowed.
Most commercial insurance policies are unlikely to cover pandemics or unspecified notifiable diseases, such as COVID-19. However, those businesses which have an insurance policy that covers government ordered closure and pandemics or government ordered closure and unspecified notifiable disease should be able to make a claim (subject to the terms and conditions of their policy). Insurance policies differ significantly, so businesses are encouraged to check their specific policy’s terms and conditions and contact their providers.
If you have any questions, please contact us at firstname.lastname@example.org or call 0800 917 9100. If you are a client, your accounts manager will be happy to answer any queries you may have.