Support Package for Self Employed Announced
Chancellor says “Support package for the self employed would cover 80% of average earnings over the past 3 years”
This support will not be available until early June but you do have access to the Business Interruption Loan and many other forms of support available like Universal Credits.
HMRC will write to you individually inviting you to apply for the support, asking you to fill in a form to confirm that you are still self employed.
The cap will be £2,500 in line with the employed members of the public.
If you have not completed your Self Assessment Tax Return for 2019 which was due 31.01.2020 you will not be invited to apply to the scheme. However, the Government are giving you an extra 4 weeks from today (23.04.2020) to get your submission completed.
In June you will receive 3 months worth of payments in “one hit”
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Further information on support during COVID 19 can be accessed by clicking here
Yesterday evening, the Government announced further “unprecedented” measures to support businesses and their employees.
The message is to hold on to staff not to make redundancies.
We will be working hard over the coming weeks to keep you updated and bring you the full details of how we can help you. However, these are the key announcements to be aware of thus far.
To protect your employees and their jobs, the chancellor has announced the government will step in and pay wages under the ‘Coronavirus Job Retention Scheme’. Employers will be able to apply to HM Revenue & Customs for grants to pay up to 80% of an employee’s wages up to a maximum of £2,500 per month per employee.
This covers wages backdated to 1st March 2020 and the scheme will be in place for 3 months, although it may be extended. The grants are expected to be paid out from April.
It means your employees can keep their jobs, even if you can’t afford to pay them right now.
“No business will pay any VAT from now until the end of June”.
This means your next VAT return (quarters that end March, April or May) won’t be collected or payable in the normal way. However, you will have to pay it eventually. Businesses will have until the end of the year to pay this VAT to HMRC – it is a delayed payment not another grant.
The Coronavirus Business Interruption Loans will now be interest-free for 12 months instead of the 6 months previously announced. These loans will be available from Monday 23rd March 2020 but, with the new grants to cover employee wages, we would urge you to properly plan before rushing into any additional lending needs.
Normal lending criteria would mean you would need your most recent set of accounts together with management accounts for the period since your year end and forecasts for 12-24 months. We expect a number of these things will need to be in place.
The Government are introducing a 12 month rates relief for Retail, Hospitality and Leisure for the 2020 to 2021 tax year.
A £25,000 grant will also be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.
Small business will receive rates relief and a £10,000 grant for businesses with rateable value £15,000 or less. This will be applied automatically by your local authority.
Payments on account due on 31st July 2020 towards self-assessment income liabilities will be deferred to 31st January 2021 – Tax returns will still be submitted as usual commencing April, so that you can access any rebate you are due.
Self-employed are now entitled to Universal Credit at a rate equivalent to statutory sick pay (£94.25 per week for up to 28 weeks).
The Chancellor also promised further measures next week to ensure larger and medium sized businesses will be able to access the credit they need.
This is a lifeline for small businesses and will help with the challenges we all face over the next 3 months.
BKS Accounts are keen to be able to support you every step of the way and help you put these measures into place for your business. We will provide more details as and when they are released.
18th March COVID-19 Update
As you will see, the government are saying that businesses who pay little or no business rates will be provided with a one-off grant. The information says £10k. However I personally feel “surely it can’t be as easy as that”?? Regardless of that thought, these grants you do not apply for, but the local authority will contact you directly!
The government have said they will be supporting businesses through the Coronavirus Business Interruption Loan Scheme. My current understanding of this is this is something that businesses can apply for, but not until next week when further information will be given.
In terms of “support for businesses paying tax” – I have first hand knowledge of this and can confirm that when I spoke to HMRC on behalf of a client, there were no questions asked about them not being able to afford to pay the PAYE and VAT. I was advised that we could “skip” a month, and call back next month if the company is still having problems paying.
Once I have more information, I will update you. I’m sure most of you are already aware of these facts. However, when it comes to the crunch, i.e. applying etc. many of my clients have asked me to do this on their behalf, so if anybody needs any support in this way, we will help you with this process.
The government will provide additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR). This will provide a one-off grant of £10,000 to businesses currently eligible for SBRR or rural rate relief, to help meet their ongoing business costs.
If your business is eligible for SBRR or rural rate relief, you will be contacted by your local authority – you do not need to apply.
Funding for the scheme will be provided to local authorities by government in early April. Guidance for local authorities on the scheme will be provided shortly.
A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch next week to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value. Businesses can access the first 6 months of that finance interest free, as government will cover the first 6 months of interest payments.
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. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.
If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.
Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim.
Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.
Increase in National Minimum Wage and National Living Wage
The National Living Wage, which is the statutory minimum for workers aged 25 and over, will increase by 6.2% to £8.72 per hour on 1 April 2020.
National Minimum Wage rates for younger workers will also increase above inflation. As the minimum wage increases more employers than ever will be directly affected, including some of those who currently pay above the minimum.
Check out the new rates and see if they impact your business.
For further information on paying the National Minimum Wage correctly you can register for one of our live webinars in March.
Electronic payment deadline falls on a weekend
In February, the electronic payment deadline of the 22nd falls on a Saturday. To make sure your payment for that month reaches us on time, you need to have cleared funds in HMRC’s account by the 21st unless you are able to arrange a Faster Payment.
Remember that it’s your responsibility to make sure your payments are made on time and if your payment is late you may be charged a penalty.
So that you know what date to initiate your payment, you need to speak to your bank/building society well in advance of making your payment to check single transaction, daily value limits and cut off times.
Find out more about paying us electronically on GOV.UK.
NIC thresholds and Statutory Payments rates 2020-2021
The government confirmed on 30 January that around 31 million taxpayers will benefit from a tax cut, as National Insurance contributions thresholds rise to £9,500 per year. A typical employee will save around £104 in 2020-2021, while self-employed people, who pay a lower rate, will have £78 cut from their bill. All the other thresholds will rise with inflation, except for the upper NICs thresholds which will remain frozen at £50,000, as announced at Budget 2018.
The threshold changes will not affect low earners’ entitlement to contributory benefits such as the State Pension, with the Lower Earnings Limit and Small Profits Threshold, above which individuals start building entitlement to contributory benefits, rising with inflation.
Further details can be found on GOV.UK.
NIC to increase from April 2022
Tax changes to fund £12 billion a year to be spent on the NHS and social care across the UK have been announced
National Insurance contributions (NICs) will increase by 1.25% for one year only for employees, employers and the self-employed from April 2022. This will cover both Class 1 (employee and employer), Class 1A and 1B and Class 4 (self-employed) NICs. Those above State Pension Age are not impacted by the April 2022 changes.
From April 2023, a new ringfenced Health and Social Care Levy of 1.25% will be introduced which will apply to those who pay Class 1 (employee and employer), Class 1A and 1B and Class 4 (self-employed) NICs and will also be extended to those over State Pension age who are in work. When the new levy comes into effect, National Insurance rates will revert back to current levels.
The levy will also apply to individuals above State Pension age with employment income or profits from self-employment above £9,568.
The levy will be administered by HMRC and collected through the current reporting and collection procedures for NICs – Pay As You Earn and Income Tax Self Assessment.
Like National Insurance, levy contributions will apply UK-wide, people will pay the same in England, Scotland, Wales and Northern Ireland.
From 2023-24, levy contributions will need to appear as a separate item on payslips. Where possible a generic message should be included payslips for the next tax year (2022-23). More information on payslip requirements will be available in due course.
The government will also increase by 1.25% from April 2022 the rate of income tax which is paid by people who receive dividend income from shares.