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Latest COVID-19 Updates
Coronavirus business support updates from our accounting team. Featuring news from the government and our opinions on how it will impact businesses.
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Applications for the third Self-Employment Income Support Grant (SEISS) can be made from 14 December 2020.
This is later than we had expected. When the application portal opens, it will be four months since the last one.
The grant was announced in the Winter Economy Plan and the amount of grant was doubled earlier this month.
Self-employed can receive 40% of their average monthly profits x 3 months, up to £3,750. It will be open to anyone who:
- would have been eligible for the first and second SEISS grants, even if they did not claim
- continues to trade but has been impacted by coronavirus, or who has temporarily stopped because of coronavirus.
HMRC will provide full details on how to claim closer to the time. We expect this to be very similar to previous SEISS grants, and will confirm this as soon as we know.
To find out more about the eligibility please see the Government’s Policy Paper. This article is based on the 30 October 2020.
The Job Support Scheme has been changed to increase government support and reduce the amount employers have to pay.
The scheme starts on 1 November 2020. When a business is experiencing difficulty keeping staff on, due to coronavirus, the Job Support Scheme can be used to help pay their wages.
What has stayed the same?
The employee will be paid for all of the hours they have worked and 67% of the hours not worked.
Businesses that have to close because of Tier 3 lockdowns can continue to access even greater funding. For these businesses, the Government will pay 67% and the employer does not need to contribute.
In all cases, the employer remains responsible for employer’s National Insurance and pension contributions.
What has changed?
The minimum hours worked has been reduced to 20% (it was going to be 33%).
The Government will now pay 62% of the hours not worked and the employer will pay 5% (was going to be 33% and 33%).
So, who pays what?
The amount of support changes depending on how many hours an employee works.
This example shows how much an employee, who normally earns £1,000, would get if they can only work one day a week instead of five.
- The employee is paid £200 by the employer for the time they have worked (was £330)
- The employer must pay an additional £40 – that is 4% of their normal pay (was £220)
- The Government will pay £496 – 49.6% of their normal pay (was £220)
- The amount not paid will be £264 – which is 26.4% of their pay (was £220)
Employees can end up receiving less pay
Because the minimum hours has been reduced from 33% to 20% , an employee who is kept on working at the bare minimum hours would be worse off under the revised scheme. If the employee is given 33% of their normal hours, they are no worse off.
The Government has doubled the next grant for the self-employed.
The grant (SEISS), which was first announced in September, will cover the period from November 2020 to April 2021 and will be paid in two instalments.
The new lump sum will be 40% (previously 20%) of average monthly profits, up to £3,750 (previously £1,875). We expect this to be paid in November.
The level of the fourth SEISS grant, covering February March and April 2021, will be reviewed by the Government in time to come.
To find out more about the eligibility please see the Government’s policy paper
Hospitality, accommodation and leisure businesses that are in Tier 2 high-alert level areas will be given an additional grant of between £934 and £2,100 per month. This money will be distributed by Local Authorities.
The grant will be based on rateable value.
The grants will be made retrospectively for areas of the country already in Tier 2 and will be paid on top of any extra funding for businesses in Tier 3 areas.
HMRC have started writing to employers to tell them about tax relief available to employees for working from home.
Although they are writing to employers, this is a relief that employees must claim themselves directly from HMRC using the Tax Relief for Employees website. When employees make a claim, the tax they pay each month via your payroll will be reduced meaning that they receive more money.
The basic allowance is not much – only £6 per week from 6 April 2020. This gives basic rate taxpayers £1.20 of tax back per week, higher rate tax payers get £2.40. Employees might be able to claim more tax relief if they use their own money to buy things for their job. Employees will not be able to claim tax relief if their employer reimburses them.
With the increase in people working from home this year, HMRC have started a campaign to ensure that employees are aware. HMRC have reported that they have processed some fifty five thousand claims, out of approximately five million who could apply.
Employees who want to know more should visit HMRC where they can check their eligibility and make an online application. Alternatively contact us for more information on this and the other schemes to support business during coronavirus.
Additional grant money will be available to pay for the employees of businesses who are forced to close due to coronavirus lockdowns.
The grant will cover 67% of employee pay for those unable to continue working due to legally required coronavirus business closures (max of £2,100 per employee per month). The employer will only have to cover NI and pension contributions.
If businesses are not legally required to close, the lower amount of grant payment will be available. This pays 1/3 of hours not worked, regardless of local lockdowns. It was first announced in the Chancellor’s Winter Economy Plan.
Both schemes will be available for 6 months and will start at the beginning of November. You will be able to claim from the beginning of December using HMRC’s web portal.
For more details, please see the Government’s guidance.
The Job Retention Bonus of £1,000 can be claimed by employers between 15 February 2021 and 31 March 2021. An employer can claim this one-off taxable amount for each employee providing that:
- they were furloughed, and are still on the payroll on 31 January 2021
- you have received grant money for them from the job retention scheme
- their average pay between November 2020 and January 2021 is at least £1,560 and they received pay each month
Money claimed through this bonus does not have to be paid to the employees.
The Government guidance will be updated by the end of January 2021. To prepare you can:
- ensure that you are enrolled for PAYE online and that you file PAYE accurately and on time under Real Time Information reporting
- keep your payroll up to date
- comply with any HMRC requests to provide data concerning CJRS claims.
To find out more please see the Government’s guidance or contact us. You can also see examples of employees who are eligible for the bonus.
HMRC have announced penalties for Coronavirus Job Retention Scheme (CJRS) grant errors. The penalty can be up to 100% on top of the grant overpayment. The penalty reduces to as little as 0% if HMRC are informed of the error and any amount received as a result of an error is repaid.
Examples of an overclaim include:
- receiving a grant despite not being eligible for it
- claiming a grant after the change of circumstances, which make an individual, a partner or a company not eligible for a grant (such as claiming CJRS for an employee who no longer works for a company).
If at least one of the above cases apply, you are required to inform the HMRC about the overclaimed grant and pay back the overclaimed amount within the relevant time period: 90 days from receiving the overclaimed grant, 90 days after the change of circumstances (whichever applies in your case) or by 20 October 2020 (the later of the two dates being the final deadline).
When paying Job Retention Scheme grants, very few employers were contacted by HMRC to check their eligibility. HMRC are known to be investigating thousands of claims that have already been paid out. We recommend keeping clear records of what you have claimed, who it was for and any proof you have that the employee was eligible for the grant payment.
HMRC have prepared the document which gives more details about the planned investigations.
New Job Support Scheme will run for six months from November 2020 until April 2021.
The Scheme will be open to all small and medium businesses with a UK payroll. Large businesses will need to prove that their turnover has decreased as a result of Covid-19.
The scheme will be available to pay for employees:
– employed on or before 23 September 2020,
– working at least 33% of their hours and paid for those as normal.
The Government and the employer will each pay for 1/3 of any hours not worked, allowing the employee to earn at least 77% of their normal wages.
A claim will need to be made by employers. They will be able to access the grant portal from December 2020.
For more details, please see the Government’s policy paper.
In order to decrease unemployment amongst young people in England, the Government has announced additional payments for employers hiring apprentices.
Currently employers can receive a payment of £1,000 for every new apprentice between 16-18 years old and those aged under 25 with an Education, Health and Care (EHC) Plan. The new payments will be added to the existing £1,000.
In total, employers will receive:
16-24 with EHC
25 and over
The additional payments will apply to those who started their apprenticeship between 1st August 2020 and 31st January 2021 and can be claimed until 30 April 2021. The employee must be new to the organisation.
The two instalments will be paid as follows:
1st (50%): upon completion of 90 days of apprenticeship
2nd (50%): after 365 days
The government will give Self-assessment taxpayers 12 more months to pay their taxes.
The following rules apply:
- amounts due in January 2021 can be deferred to January 2022
- liability must be less than £30,000
Taxpayers will be able to agree a payment plan using HMRC’s Time to Pay facility. Repayments will be in equal instalments over the 2021/22 tax year.
The Bounce Back Loan length has been extended from 6 to 10 years. This means that the monthly repayments can be reduced by nearly 50%.
Additionally, the greater flexibility allows the businesses to:
- repay interest only for up to 6 months (this option can be used up to three times)
- take payment holidays for up to 6 months (this option can be used once after making the initial 6 payments)
The possibility to apply for a Bounce Back Loan and other government coronavirus loan schemes, has been extended to the end of November.
For more information about the available schemes please see the Winter Economy Plan
Any businesses who has taken advantage of the VAT deferral earlier this year have been given the option to make smaller monthly payments instead of paying off in one go.
Choosing this option would result in making 11 equal instalments between April 2021 and March 2022 without being charged interest.
The payment that can be spread is for VAT that was due for VAT periods ending between March to June 2020. The government first announced this deferral in March 2020 and had told us that payment would be due by 31 March 2021. The winter statement gives businesses an extra year to pay this bill off in full.
The VAT cut (from 20% to 5%) for the tourism and hospitality sectors has been extended from 12 January and will now end on 31 March 2021.
The reduced rate of 5% applies to: suppliers of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to attractions across the UK.