Please see below our latest Briefing, which we hope you will find useful.
Bounce Back Loans (Update)
This Government initiative went live on Monday 4 May and you are now able to submit Applications. In our last Brief we were unsure about the criteria that had to be met in respect of turnover before you could apply. We have now had this clarified in so much as there is nothing in the small print regarding a maximum amount of turnover, there is just a cap of £50,000 on the amount that can be borrowed. Therefore, our understanding is, even if your turnover exceeds £200K you are still able to apply but the maximum you can borrow will be capped at £50,000.
We have been alerted this week by our Banker friends, that they have been notified to review any lending to be issued to a Group or Linked companies, as part of any application process. Albeit they cannot be specific (because they have requested further guidance) whether this means just Subsidiaries or Commonly Controlled businesses too.
An organisation is meant to get either a Bounce back or a CIBL loan – not both.
Therefore, the issue here is you would not want a smaller group member or Linked firm to request a Bounce Back loan in haste, which then precludes a larger group member from requesting a much larger CIBLS loan. Guidance is still being issued, but please be careful. It would be worth speaking to your Bankers if you are involved with Group or Linked businesses in this regard before applications are lodged.
Extra Business Grant Funding – Discretionary Fund
The Government has announced support for businesses that do not qualify for business rates support.
A discretionary fund has been set up to accommodate certain small businesses in England, previously outside the scope of the Business Grant Funds Scheme. This additional fund is aimed at small businesses with ongoing fixed property-related costs. Local Authorities are being asked to prioritise businesses in shared spaces, regular market traders, small charity properties that would meet the criteria for Small Business Rates Relief, and bed and breakfasts establishments that pay Council Tax rather than business rates.
Businesses must be small, under 50 employees, and they must also be able to demonstrate that they have seen a significant drop of income due to Coronavirus restriction measures. Local Authorities may choose to make payments to other businesses based on local economic need.
The maximum grant will be £25,000. There will also be grants of £10,000. Local Authorities will have discretion to make payments of any amount under £10,000.
You access this money by contacting your Local Authority.
Self Employed Income Support Scheme (SEISS)
As we advised in our briefing dated 27 March, the Government has introduced the Self-Employed Income Support Scheme (SEISS). For clarity, you are not classed as self-employed if you are a Director and shareholder of your own limited company, you are only classed as self-employed if you are a sole trader or a partner in a trading partnership.
The Scheme provides a Grant of 80% of profits, up to a cap of £2,500 per month. Please note, this is the profit declared on your Tax Returns, not as per your Accounts, and will be calculated on an average profits from the years 16/17, 17/18 and 18/19.
The Scheme is open to those where the majority (so over 50%) of their income comes from self-employment and who have profits of less than £50,000. In addition, those applying must:
· have lost profits due to Covid 19
· filed a Tax Return for 18/19 as self-employed or as a partner
· have traded in 19/20 and, at the point of application, must be trading (or would be except for Covid 19)
· intend to continue to trade in the tax year 20/21
HMRC have made the decision not to allow us as your agents to make this claim for you, therefore you will have to do this yourself.
To enable you to do this you will need to use the link below and have your National Insurance number and Unique Tax Reference number (UTR) to hand.
This information will be on your self-assessment tax returns, but if you cannot find this information, please call us and we can provide it to you.
If you follow the steps in the link you will be provided with a date from which you can make your claim.
It will also tell you that you need a Government Gateway account to make this claim. IT IS IMPERATIVE THAT YOU SET THIS UP WITHOUT DELAY.
If you have not got this, you will not be able to request a grant. The set-up of the Government Gateway account should take around 15 minutes if you have your passport to hand and choose to use this as your way of letting the Government identify you.
Then scroll down the page, beneath the green ‘Sign in’ button there is a blue link that says
Click on this and follow the steps through.
Please do remember to print out and keep a record of the User ID issued for this Government Gateway Account as we will not have it and we cannot get it.
In some instances HMRC records detail that clients can claim the SEISS grant, when in fact they have ceased self-employment. Largely due to their failure to update their records on a timely basis. If this applies to you, please do not make a claim, as any money issued will be refundable and you are likely to be charged interest and penalties as a minimum.
We are here to help you through the process so please call us if you have any issue and we can talk you through what to do and when.
In an earlier Brief we were unsure of the following, and can now provide an update:
How HMRC will determine whether your business has suffered a negative impact?
This is still unclear, but seems to be down to an individual assessing if they have been negatively impacted.
Will funds given under this support scheme represent taxable income in your 20/21 accounts?
If your self-employed income for 20/21 (with or without the inclusion of the grant) exceeds £50K – will there then be some claw back of support given?
No further detail issued on this as yet
As you will be aware, we have been working very hard on ensuring that we have contacted all our clients who we feel are eligible for this Scheme and providing them with the calculations needed to apply. If you have not heard from us and you feel you may be eligible, please contact us as a matter of urgency.
Tax Relief Claim for Home working
Employees who have had to work from home as a result of the measures to control COVID-19 are able to claim Tax relief for the additional costs of working from home, when these are not being reimbursed by their employer.
These can include study chairs, desks and stationery, printer paper and ink etc. – if these are “wholly, exclusively and necessary” in the performance of the job role.
Alternatively, instead of claiming actual expenses, employees may claim HMRC’s Home Working Allowance of £6 per week from 6 April 2020 (£4 per week up to 5 April 2020) for additional household expenses incurred while working from home.
Please alert your home working employees of this relief, so they can claim should they think they qualify.
If you have decided to claim actual expenses and not the above relief, if your employment expenses are up to £2,500 per year, you will need to submit a P87 form to HMRC. For larger sums, you will also need to submit a Tax Return. You can download a P87 form on the Government Gateway website and send it to HMRC online or by post.
HMRC specify in their guidance that the Form P87 claim should be made:
1. Online if it relates to multiple tax years and up to five different jobs.
2. By post, if made on behalf of someone else or it relates to more than five different jobs.
3. By phone, if a claim has already been made in a previous year and the total expenses are less
You have four years from the end of the Tax year to make a claim. If successful, HMRC will pay you by cheque or adjust your Tax code. You will need to keep your receipts in case HMRC wishes to check these.
We can complete the P87 claims on behalf of your workforce, as a project. Please call us if you are interested in engaging this service.
Further VAT Reliefs
HMRC have announced two further VAT reliefs, both of which became effective as of Friday 1st May
· A temporary zero rate for all supplies of PPE equipment as defined by Public Health England’s coronavirus (COVID-19) PPE guidance is to be applied for the period 1 May to 31 July 2020
HMRC state the objective is to relieve the burden of VAT on the price of purchasing PPE used for protection from coronavirus by front line workers. The measure will particularly aid sectors that cannot recover VAT on such goods due to their VAT exempt status, such as care homes, but will benefit all consumers.
· The zero rate for electronic publications has been brought forward in recognition of the increase in demand for home learning.
Further information can be found at https://www.gov.uk/government/publications/revenue-and-customs-brief-3-2020-vat-liability-of-supplies-of-electronic-publications/revenue-and-customs-brief-3-2020-vat-liability-of-supplies-of-electronic-publications