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25th January 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 April 2021)

The government’s Coronavirus Job Retention Scheme (CJRS) – also known as the Furlough scheme – will remain open until the end of April 2021.

Businesses will be able to bring furloughed employees back to work on a part-time basis or furlough them full-time. They will only be asked to cover National Insurance and employer pension contributions which, for the average claim, accounts for just 5% of total employment costs.

The grant level will mirror levels available under the CJRS in August 2020, so the government will pay 80% of wages up to a cap of £2,500 and employers will pay employer National Insurance Contributions and pension contributions only for the hours the employee does not work.

It is possible to claim for employees who were employed on 30 October 2020, as long as a payroll submission was made to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.

Self-Employment Income Support Scheme (Third Grant)

The scheme has been extended once again and will be available for three month periods covering November 2020 to January 2021 and February 2021 to April 2021.

Who can claim

Those who have been previously eligible for the Self-Employment Income Support Scheme first and second grant (although they do not have to have claimed the previous grants) and declare that they intend to continue to trade and either:

  • are currently actively trading but are impacted by reduced demand due to coronavirus
  • were previously trading but are temporarily unable to do so due to coronavirus

Eligibility reminder; you can claim if you:

  • traded in the tax year 2018 to 2019 and submitted a Self Assessment tax return on or before 23 April 2020 for that year
  • traded in the tax year 2019 to 2020
  • intend to continue to trade in the tax year 2020 to 2021
  • carry on a trade that has been adversely affected by the coronavirus

What the Grant extension covers

To claim the third grant, the business must have had a new or continuing impact from coronavirus between 1 November 2020 and 29 January 2021. There must also be a reasonable belief that it will have a significant reduction in profits. All evidence must be kept to support the claim.

The third taxable grant is worth 80% of the average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.

The online service to claim the third grant is open. Eligible applicants must make their claim for the third grant on or before 29 January 2021.

The grants do not have to be repaid but are taxable income and subject to National Insurance contributions.

Statutory Sick Pay (SSP)

This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19.

  • 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.

Self-Assessment Deferral

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.

Penalties

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 Deferral

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 into the VAT deferral new payment scheme when it launches in 2021
  • contact HMRC if you need more help to pay

When it becomes available, the new payment scheme will allow businesses to:

  • pay the deferred VAT in instalments without adding interest
  • select the number of instalments from 2 to 11 equal monthly payments

To use this scheme, the eligible business must:

  • still have deferred VAT to pay
  • be up to date with your VAT returns
  • opt-in before the end of March 2021
  • pay the first instalment when you opt-in

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 won’t be any 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.

Commercial Insurance

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.

Updates

We aim to keep this guide regularly updated with the latest information by the Government. For more updates and useful guides, remember to follow us on  LinkedInFacebook or Twitter.

If you have any questions, please contact us at info@myaccountant.co.uk or call 0800 917 9100. If you are a client, your accounts manager will be happy to answer any queries you may have.

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