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Advice hub

31/Mar

Given the current situation, we understand that this will be a difficult time for many clients and want to ensure that Litchfields are here to support both you and your business throughout. Where we assist you with your VAT and payroll affairs, we will review any relevant claims and discuss these with you as part of our ongoing service. If you wish to discuss whether any of the points below are relevant to your or your business, please do not hesitate to contact us.

Litchfields staff are working from home and can still be contacted using the office number 020 7729 7290 or by email.

SUPPORT FOR BUSINESSES

Self-Employed Income Support Scheme
The Self-Employed Income Support Scheme has been introduced to help support self-employed individuals and members of a partnership who have lost income due to Coronavirus. To be eligible for the scheme you must have:

  • submitted your 2018/19 tax return
  • traded in the 2019/20 tax year
  • intend to continue to trade through the 2020/21 tax year
  • not ceased to trade
  • lost trading/partnership profits due to COVID-19
  • self-employed trading profits less than £50,000
  • income from self-employment being more than half of your taxable income

Where a claim is made, the individual will receive 80% of their average trading profits for the 2016/17, 2017/18 and 2018/19 tax years up to a maximum of £2,500 per month.
You cannot apply for this scheme yet. HMRC will make an announcement once the scheme is available and grants are expected to be paid out in one lump sum at the beginning of June 2020.

Coronavirus Job Retention Scheme

Where PAYE employees would otherwise be laid off by their employers due to the Coronavirus crisis, a government grant can be claimed to cover 80% of the employee’s salary. All employers are eligible for the scheme which can be backdated to 1 March 2020 covering employees in employment at 28 February 2020. To qualify for this scheme, employees must not be undertaking work from home. The scheme is temporary and is currently in place for the 3 months commencing 1 March 2020 however, the government may extend this.
The government plan to have the scheme open by the end of April and to claim, employers will need to:

  • Designate affected employees as ‘furloughed workers’ and notify the employees of this change – changing the status of the employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation. Furloughed workers must not carry out any work for their employer. This includes providing services or generating revenue.
  • Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal.
    80% of the furloughed workers wages will be reimbursed up to a cap of £2,500 per month. HMRC will also reimburse the associated pension (maximum contribution 3%) and national insurance costs. Employers may choose to top up the employees pay by the remaining 20%.

HMRC have clarified the following points:

The scheme is available to all employers with a PAYE scheme in place at 28 February 2020, not just businesses e.g. a nanny employed by a family will also qualify

  • Where an employee is working on reduced hours or reduced pay, they will not be eligible for the scheme and the employer must continue paying the employee subject to the terms of their employment contract
  • To be eligible for the scheme, employers must write to their employees confirming they have been furloughed and keep a record of the communication
  • Employees employed after 28 February 2020 cannot be furloughed and will not be eligible for the scheme
    The scheme covers employees who were made redundant post 28 February 2020 if they are rehired by their employer
  • For full time and part time employees, the claim will be based on the employee’s actual salary at 28 February 2020
  • For employees whose pay varies, where they have been employed for 12 months or longer, the claim will be based on the higher of the same month’s earnings for the previous year, or the average monthly earnings from the 2019/20 tax year
  • For employees whose pay varies, where they have not been employed for 12 months or longer, the claim will be based on their average monthly earnings since they started work
  • If the employee started work in February 2020, a pro-rata of their earnings so far will be used to process the claim
  • Directors of owner managed companies may claim where they are not carrying out any work for their company
  • 3 weeks is the minimum length of time an employee can be furloughed for

To make a claim, you will need to have registered with HMRC for PAYE online. Alternatively, if Litchfields prepare your payroll, we can make a claim on your behalf.

Employment Advice
Some clients pay for, and are covered by, Litchfield’s fee protection insurance. With this service comes access to a free employment law and HR helpline. Please contact us if you are unsure whether this applies to you or if you require the helpline details.

VAT Deferral Scheme
All businesses are eligible for the VAT deferral scheme which will apply to payments due between 20 March 2020 and 30 June 2020. The deferral applies automatically, and the taxpayer will be given until 31 March 2021 to settle any accumulated liabilities. This includes VAT liabilities for quarters ended February 2020, March 2020 and April 2020 and no interest or penalties will be charged as a result of the deferred payments.

The payment deferral system is automatic and no claim needs to be made however, if you pay your VAT liabilities by Direct Debit, you should ensure that the Direct Debit is cancelled. VAT reclaims will be paid as normal.

Business Rates Holidays
Retail, hospitality and leisure businesses based in England will be eligible for a business rates holiday for the 2020/21 tax year. Business rates holidays are also available for nurseries. Relief will be applied automatically, and local authorities should reissue your April 2020 bill. Further details regarding eligibility are included in the government guidance.https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/873622/Expanded_Retail_Discount_Guidance.pdf

Business Rates Grants
Businesses in the retail, hospitality and leisure sectors may also receive a cash grant of:

  • £10,000 where the rateable value is under £15,000
  • £25,000 where the rateable value is between £15,001 and £51,000

Small businesses that pay little or no business rates may receive Small Business Grant Scheme funding of £10,000. Businesses are eligible if they:

  • occupy a property
  • receive small business rate relief or rural rate relief
  • Have a rateable value less than £15,000

If you are eligible for a grant your local authority will write to you. Any enquiries regarding eligibility should be directed to the relevant local authority.

Business Interruption Loan Scheme
The Coronavirus Business Interruption Loan Scheme is open for applications and will provide small and medium-sized businesses (turnover less than £45 million) with loans of up to £5m. Interest will not be charged for the first 12 months. The accredited lenders are listed here https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/accredited-lenders/

Insurance Claims
The government and insurance industry have confirmed that advice to avoid pubs, theatres, restaurants etc is sufficient to make an insurance claim where the business is covered for pandemics and government-ordered closure. Insurance policies can vary significantly so please check the terms and conditions of your policy.

Statutory Sick Pay
Employers with less than 250 employees at 28 February 2020 can reclaim Statutory Sick Pay (£94.25 per week) for sickness and absence from work due to Coronavirus. Where the employer requires, employees can claim an isolation note from NHS 111 online.
The rebate scheme is currently being developed and should be available in April 2020. Once available, claims can be backdated to 13 March 2020.

HMRC Time to Pay
HMRC’s Time to Pay service will make arrangements on a case-by-case basis for businesses and self-employed people who are in temporary financial distress due to COVID-19. Where there are outstanding tax liabilities, time to pay can be arranged using the dedicated helpline 0800 0159 559

Protection from Eviction for Commercial Tenants
Commercial tenants who cannot pay their rent due to COVID-19 up until 30 June 2020 will be protected from eviction. This is not a rent holiday and the tenant will still be liable to pay the rent due at a later date.

SUPPORT FOR INDIVIDUALS
Income Tax Payments
All self-assessment taxpayers can defer their 31 July 2020 Income Tax payments to 31 January 2021. This deferral is automatic and no penalties or interest will be due on the late payment.

Personal Debt Repayments
If you are experiencing difficulty meeting loan or credit card repayments as a result of COVID-19 please speak to your lender. The FCA has called on all lenders to take into account individual circumstances when arranging flexibility for customer debt repayments.

Mortgage and Rent Holidays
Lenders are offering 3-month payment breaks on both residential and buy-to-let mortgages. Interest will continue to be charged on the amount due. Please contact your lender for further details.
Tenants can apply to their landlord for a 3-month payment holiday. Landlords cannot evict tenants from their homes over the next 3-months nor can they have their home repossessed.
Government support for rent costs will be paid through Universal Credit (see below).

Universal Credit and Employment Support Allowance
The eligibility criteria for Universal Credit claims have been relaxed and therefore self-employed individuals can now claim without first attending a jobcentre. New claims can be made at https://www.gov.uk/apply-universal-credit

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