News

Self-Employed Income Support Scheme

The long-awaited statement from the Chancellor, Rishi Sunak regarding COVID-19 support for the self-employed has been announced. The Chancellor said that the scheme will benefit some 95% of people whose main income source is derived from self-employment.

A list of the scheme features as announced, and published, are as follows:

  • Those that qualify will receive a cash grant from HMRC based on 80% of profits, up to £2,500 per month,
  • The initial grant will be for the three months, from 1 March through to the end of May 2020, but could be extended for a longer period. 

To be eligible, the following conditions will be taken into account:

  • Applicants must be self-employed or a member of a trading partnership,
  • Have lost trading profits due to COVID-19,
  • Have filed a tax return for 2018-19. Late filers will have four weeks from 26 March 2020 to do so,
  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID-19) and intend to continue to trade in the tax year 2020-21,
  • Have trading profits of less than £50,000 and more than half of total income from self-employment. This can be with reference to at least one of the following conditions:
    • Your trading profits and total income in 2018-19,
    • Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.

There is no need to apply to HMRC as they will contact you if you are eligible. HMRC will use existing data to make this judgement. The initial three-month grant will be paid directly to a nominated bank account in a single lump sum. The grants are expected to be paid out at the beginning of June. The reason for this delay is likely down to three main factors: the 4 weeks additional filing time for late filers, the requirement to set up a complex new system at the same time as the Coronavirus Job Retention Scheme and to reduce the risk of fraud. 

It is assumed that those self-employed who have experienced a significant drop in income due to COVID-19 disruption will need to apply for Universal Credits or Business Continuity Loans to tide them over until June. This will be a challenging time for those affected as the demand for help will place significant challenges on the institutions charged with providing this support.
 
CORONAVIRUS JOB RETENTION SCHEME (CJRS) – update for director shareholders

There has been uncertainty as to the position of director/shareholders claiming under the CJRS as their income is usually taken from their company as a combination of a low salary and dividends. In the news story published following the Chancellor’s statement on 26 March (regarding the Self-employed scheme) is a telling paragraph. It says:
 
Those who pay themselves a salary and dividends through their own company are not covered by the scheme (the Self-employed Scheme) but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.

This infers that directors will only be eligible for the CJRS based on their salary alone, and only if there is a proven PAYE record.

Further details of the CJRS are due to be published imminently and will be added to our newsfeed as soon as they are available.

Source: HM Treasury Fri, 27 Mar 2020 05:00:00 +0100

Acas publishes updated coronavirus resources

Acas has published updated guidance for employers and employees on the coronavirus (COVID-19). The guidance now covers:

  • social distancing and vulnerable people
  • self-isolation and sick pay
  • what to do if the employer needs to close the workplace
  • what to do if an employee needs time off work to look after someone
  • what to do if someone has coronavirus symptoms at work
  • good practice steps for employers
  • links to further advice on coronavirus.

The guidance is being updated on a daily basis. 
 

Source: ACAS Thu, 26 Mar 2020 05:00:00 +0100

Coronavirus: government launches online “isolation notes” service

Employees who are unable to work for more than seven days because of coronavirus (COVID-19) can now obtain an “isolation note” through a new online service. The new isolation note, which can be used by employees as evidence of their coronavirus-related absence from work (either because they have symptoms or they live with someone who has symptoms) and so cannot work, is a temporary alternative to the fit note for use during the coronavirus pandemic. Employees can continue to self-certify for their first calendar week of absence.

The new online service is available through the NHS website, NHS 111 Online or via the NHS app. After answering a few questions, an isolation note will be emailed to the user. If they don’t have an email address, they can have the note sent to a trusted family member or friend, or directly to their employer. The service can also be used to generate an isolation note on behalf of someone else.

Source: NHS Thu, 26 Mar 2020 05:00:00 +0100

Tax relief for pension contributions

The decision of the Chancellor, Rishi Sunak to increase the tapered annual allowance thresholds in the Budget earlier this month will have been welcomed by many high earners. From 6 April 2020, the tapered annual allowance will increase from £150,000 to £240,000. The annual allowance for tax relief on pensions will remain at £40,000 for 2020-21.

This means that anyone with income below £240,000 will no longer be affected by the tapered annual allowance rules. From April, those earning over £240,000 will begin to see their £40,000 annual allowance tapered. For every complete £2 income exceeds £240,000 the annual allowance is reduced by £1.

The minimum level to which the annual allowance can taper down will also be reduced from £10,000 to £4,000. This reduction in the annual allowance will only kick-in for individuals whose income is over £300,000 and who will lose up to a further £6,000 of annual allowance in 2020-21. This will affect only those with the very highest earnings. A taxpayer earning £312,000 or more will only be able to contribute a maximum of £4,000 into a pension with the benefit of tax relief in 2020-21.

There is also a three year carry forward rule that allows taxpayers to carry forward unused annual allowance from the last three tax years if they have made pension savings in those years. The calculation of the exact amount of unused annual allowance that can be carried forward can be complicated especially if you are subject to the tapered annual allowance.

Source: HM Revenue & Customs Wed, 25 Mar 2020 05:00:00 +0100

COVID-19 – new ministerial structures

The Prime Minister, Boris Johnson has set up four new ministerial structures to coordinate, prioritise and respond to the Coronavirus pandemic.

The new implementation committees will focus on health, public sector preparedness, economy and international response. This new structure is in addition to the regular UK COBR meetings to take strategic decisions and review overall progress in the campaign to contain, delay and mitigate Coronavirus. The new committees will feed into daily C-19 meetings chaired by the Prime Minister and refine the measures agreed by COBR.

The details of the four implementation committees are:

  • Healthcare: chaired by the Health Secretary to focus on the preparedness of the NHS. Notably, ensuring capacity in the critical care system for those worst affected and the medical and social package of support for those to whom we will be providing the new shielding regime.
  • General Public Sector: chaired by the Chancellor of the Duchy of Lancaster to look at preparedness across the rest of the public and critical national infrastructure, excluding the NHS.
  • Economic and Business: chaired by the Chancellor, with the Business Secretary as deputy chair, to consider economic and business impact and response, including supply chain resilience. It will also coordinate roundtables with key sectors to be chaired by relevant Secretaries of State.
  • International: chaired by the Foreign Secretary, to consider our international response to the crisis through the G7, G20 and other mechanisms, including like-minded groups, and the UK five-point plan.
Source: HM Government Wed, 25 Mar 2020 05:00:00 +0100

Tax-Free Childcare scheme

The Tax-Free Childcare Scheme (TFCS) is open to all eligible families with children under 12. It was announced as part of the Budget measures that a service improvement will be made to ensure the TFCS is compatible with school payment agents. This will allow parents of up to 500,000 school-aged children across the UK to access the TFCS and use it towards the cost of their wraparound childcare (such as breakfast and after-school clubs).

The TFCS helps support working families with their childcare costs. The scheme provides for a government top-up on parental contributions. For every 80p in the £1 contributed by parents an additional 20p or 20% will be funded by the government up to a maximum total of £10,000 per child per year. This will give parents an annual savings of up to £2,000 per child (and up to £4,000 for disabled children until the age of 17) in childcare costs.

The scheme is open to all qualifying parents including the self-employed and those on a minimum wage. The scheme is also available to parents on paid sick leave as well as those on paid and unpaid statutory maternity, paternity and adoption leave. In order to be eligible to use the scheme, parents will have to be in work at least 16 hours per week and earn at least the National Minimum Wage or Living Wage. If either parent earns more than £100,000, both parents are unable to use the scheme.

The earnings limit does not apply to newly self-employed who started their business in the last 12 months. In addition, as self-employed income can vary, profits can be averaged across the tax year if it is necessary in order to meet the minimum income requirement.

Source: HM Revenue & Customs Wed, 25 Mar 2020 05:00:00 +0100

Paper tax returns

HMRC has announced that taxpayers still using paper returns will no longer routinely do so. This is part of the efforts to encourage the use of online services and reduce the unnecessary use of paper.

Last year, HMRC automatically sent out more than 500,000 blank paper tax returns, while more than 10.4 million taxpayers filed their returns online. This means that approximately 6% of taxpayers submitted a paper return and that figure continues to reduce each year as the take-up of online services grows.

From next month, instead of automatically receiving a paper return, taxpayers who have filed on paper will receive a short notice to file. This notice to file will tell taxpayers that HMRC intends to communicate with them digitally and will also provide them with information about managing their tax affairs through their Personal Tax Accounts.

If taxpayers still wish to continue using paper returns, they can download a blank version or call HMRC to request one. Where HMRC is able to identify taxpayers, whose personal circumstances mean they cannot file online, they will continue to receive a blank paper return.

The use of paper will also be further reduced when HMRC stops providing more than three million blank P45s and 11 million P60s in April. The vast majority of employers already use their existing HMRC, free or commercial software to produce P45s and P60s for their employees.

Source: HM Revenue & Customs Wed, 25 Mar 2020 05:00:00 +0100

Further details on Hardship Fund published

The launch of a new £500 million Hardship Fund in England was announced at Spring Budget 2020 by the Chancellor. On 24 March 2020, the Local Government Secretary Rt Hon Robert Jenrick MP confirmed the Hardship Fund will provide council tax relief to vulnerable people and households to help those affected most by Coronavirus.

This means that the money will go to local authorities in England to enable them to reduce the 2020-21 council tax bills of working age people receiving Local Council Tax Support.

Councils can also use the funding to provide further discretionary support to vulnerable people through other support arrangements such as Local Welfare Schemes. This guidance helps provide clarity to councils on how they can quickly provide support to those households which require support.

Councils have also been told they will receive an additional £1.6 billion in funding to enable them to respond to other COVID-19 pressures across the services they deliver, including stepping up support for the adult social care workforce and for services helping the most vulnerable, including homeless people.

The funding for the Hardship Fund may need to be increased during the coming months as the full impact of COVID-19 become apparent.

Source: HM Government Wed, 25 Mar 2020 05:00:00 +0100

Business rates and grants – regional variations

We have written about the changes to business rates for businesses in England due to COVID-19. There is also a Retail and Hospitality Grant Scheme that provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property as well as a one-off Small Business Grant of up to £10,000 to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief.

The business rates in Scotland, Wales and Northern Ireland are set by the devolved administrations. We have set out below the main regional variations.

Scotland

To help owners of non-domestic properties, including businesses, deal with the impact of COVID-19, the Scottish Government has made changes to non-domestic rates (business rates) for 2020-21.

All non-domestic properties in Scotland will get a 1.6% rates relief. This relief effectively reverses the change in poundage for 2020-21. You do not need to apply for this relief, and it will be applied to your bill by your local council.

Retail, hospitality and leisure businesses will get 100% rates relief. To get this relief, a property has to be occupied. Retail, hospitality and leisure businesses with a rateable value between £18,000 and up to and including £51,000 will be able to apply for a one-off grant of £25,000.

A one-off grant of £10,000 will also be available to small businesses who get Small Business Bonus Scheme relief or Rural Relief.

The Scottish Government is working with Scotland's 32 Councils and other stakeholders to agree a common approach to the application process for the grants and 100% rates relief.

Wales

Retail, leisure and hospitality businesses will receive 100% business rates relief for 2020-21.

For retail, leisure and hospitality businesses with a rateable value of between £12,001 and £51,000, a grant of £25,000 will be offered.

The new reliefs also provide a £10,000 grant to all businesses eligible for Small Business Rates Relief and with a rateable value of £12,000 or less.

Businesses that qualify for this support will not need to do anything to apply for this scheme. This will be administered through the Business Rates system. You do not need to contact your Local Authority about this, you will receive information in due course.

Northern Ireland

Businesses in Northern Ireland can access the following schemes:

  • COVID Small Business Grant – Small business grant of £10,000 to be issued immediately with a cost of £267m providing support to 27,000 businesses in NI. This is for all businesses with a NAV up to £15,000
  • Hospitality, Tourism and Retail Sectors Grant Scheme – An immediate grant of £25,000 will be provided to companies in these sectors with a rateable value up to £51,000.

Further information on these schemes will be made available at NI Business Info.

All NI businesses will pay zero rates for the next three months (April, May, June). This automatically reduces rates by 25%, in addition to any existing rate reliefs. This applies to all businesses and does not need to be repaid.

Source: HM Government Wed, 25 Mar 2020 05:00:00 +0100

COVID-19 and claiming benefits

The government has announced that certain benefits will be increased as part of the package of measures to help households affected by COVID-19. This will see the standard rate of Universal Credit and Tax Credits increased by £20 a week (£1,040 per year) for one year from 6 April 2020.

It has earlier been announced as part of the Budget measures that the self-employed are to be provided with easier access to Universal Credits and the Contributory Employment and Support Allowance. This means that the self-employed with no income can effectively claim Universal Credit in the same way as someone who's unemployed. However, there is a five-week waiting period before a first payment is made. An advance payment can be claimed once a claim is accepted but must be paid back. The usual requirement to attend a Jobcentre in person is currently not required and claims can be made on-line.

There will also be up to £1bn of additional support for renters through increases in housing benefit and Universal Credit. From April, Local Housing Allowance rates will pay for at least 30% of market rents in each area. This applies to all private renters who are new or existing Universal Credit housing element claimants and to existing Housing Benefit claimants.

Source: HM Treasury Wed, 25 Mar 2020 05:00:00 +0100