With schools closing and the UK entering lockdown, many business owners are asking what support is available to them, especially financial support from the government.
Tax Deferrals and Time to Pay
All VAT registered business are eligible to defer payment of VAT due between 20th March 2020 and 30th June 2020. VAT returns should be submitted as normal but payment is not required. No arrangement need be made with HMRC for the deferral, business owners should simply not make payment.
This is a deferral and liabilities are not therefore written off. HMRC is expecting the tax due to be paid by the end of 2020-21 tax year.
NB Any business who has Direct Debit set up for VAT payments will need to cancel their Direct Debit to take advantage of this arrangement
Self Employed Self Assessment Deferral
Similarly all Self Employed business owners (sole traders and members of partnerships) are eligible to defer their July Self Assessment payment on account until January 2021. Once again no application needs to be made to agree this.
NB The deferment is not available to individuals who complete Self Assessment but are not Self Employed (eg Company Directors). We believe that eligibility will be determined by whether the tax payer was self employed in the 2018-19 tax year. Please consult if you are not sure whether this applies to you.
Time to Pay
Any business experiencing financial hardship has been invited to call HMRC and arrange time to pay tax. The number to call is 0800 0159 559.
Support for Employers
The headlines this week flagged that the Government would step in to pay 80% of wages for employees. The scheme is called Coronavirus Job Retention Scheme and is also referred to as furloughing.
The scheme is designed to allow employees who would otherwise be made redundant to remain employed. Employers are invited to designate employees who would otherwise be made redundant as furloughed, then submit information to HMRC who have offered to pay 80% of their salary up to a maximum salary of £2,500 per month.
The employer is not required to remaining 20% of the salary but may choose to and staff members are not then allowed to do work for the business.
At time of writing no mechanism has been set up for this but portal is expected in the coming weeks.
The arrangement may be backdated to wages from 1st March and is initially open for 3 months.
Many Company Directors will be keen to know whether they can furlough themselves in the business. Unfortunately at time of writing HMRC has not clarified this point. Sadly we think this is probably unlikely.
Directors will also be wondering whether they will be able to increase their salaries to £2,500 in order to take advantage of this scheme. Again at time of writing it is not known on what basis furlough salaries will be set but it seems likely this will be on the basis of monthly salaries in the months preceding the scheme.
Statutory Sick Pay Rebate
Employers will be able to get a rebate for Statutory Sick Pay paid to employees if they employ less than 250 employees or fewer as of 29th Feb 2020.
Support for Business Tenants
Small Business Grants
Premises occupiers benefiting from Small Business Rates Relief will be eligible for a grant of £10,000. We believe that business owners should wait for their Local Authority to contact them about getting the grant.
Retail, Hospitality and Leisure Grant
In addition small business property occupiers in the retail, leisure and hospitality can receive a grant of up to £25,000. The increased amount is available to occupiers of premises with rateable value of more than £15,000 and less than £51,000. A lesser amount of £10,000 is available to business with rateable value of less than £15,00. Business owners are advised to wait for the Local Authority to contact them about the grant.
Retail, Leisure and Hospitality Rates Holiday
Business Premises in the retail, leisure and hospitality sectors will benefit from a business rates holiday until the end of the 2020-21 tax year.
Business Interruption Loan Scheme
Funding is accessed through one of the accredited lenders on the British Business Bank’s provider list.
Support for the Self Employed and Company Directors
As you can see there is quite an array of measures designed to support employers, occupants of business premises and anyone paying taxes. What is missing is support for subcontractors, freelancers, sole traders and company directors.
Pressure seems to be building on the Chancellor to provide support for the self employed although the rumour has it that the right mechanism is proving hard to find.
That will be welcome if it comes but we remain concerned for Company Directors whose main income is dividends. This group are not technically self employed, they may not qualify for the Job Retention Scheme. We hope they are not forgotten.