Let's Take A Breath & Recap
Most businesses will perhaps be breathing a sigh of relief at the moment, now that funds from the government have started flowing.
Let's take this time to recap on things and see if there is anything we have missed:
Furloughing Staff and Job Retention Scheme
You have furloughed any staff, sent them a letter confirming this and they have acknowledged it.
You have kept a copy of this letter on file.
You or your agent has submitted your furlough claim as part of the Job Retention Scheme Grant. Hopefully you have now received these funds.
You are keeping your agent / records up to date with any employees who might be coming back to work. Please note, they cannot come back until the furlough date you have claimed for has passed.
You or your agent is preparing for your next claim, so step 4 is crucial. Claims can be made 14 days in advance.
Any staff who take annual leave whilst on furlough can do so, but remember you have to pay them 100% of their wage for this. You can still claim back your 80% from JRS.
Local Council Business Grants
Hopefully you have already applied for these grants, either the £25k and £10k (if eligible).
Remember you need to be a registered rates payer, but don't need to have paid rates if you are eligible for Small Business Relief. However, are you registered for SBR?
You can still be eligible for SBR, but you might not have actually registered with the council for it. This could be why you have not had your grant yet and will quite possibly receive an email from the council stating so. It's worth double checking your records to ensure you are registered for SBR.
Deferred VAT and Tax Payments
Whilst any VAT payments due between 20th March 2020 and 30th June 2020 are automatically deferred. You still need to file a VAT return if one is due during this time. Failure to do so can result in penalties being issued.
Also, you can, if funds permit, still pay your VAT so that it's done and out of the way.
HMRC are also allowing the automatic deferral of Self Assessment payments that where due by 1st July 2020. These need to be paid no later than 31st January 2021.
Other tax payments such as PAYE and Corporation Tax are NOT automatically deferred and as such you will need to contact HMRC directly about this.
Please note that DEFERRAL does not mean that you don't have to pay it at some point. Businesses should be careful about what is deferred and how long they will have to pay it when business resumes. If you do defer, but can make payments towards it, then it is advisable to do so.
There are now two loan options available to businesses, each with their own criteria.
For the Coronavirus Business Interruption Loan (CBIL) it is recommended that you visit the approved website. Here you will find a list of approved lenders and eligibility. For this loan the government will act a as a partial guarantor for the amount of loan received.
The government announced on 27th April 2020 a new loan option aimed at small businesses. Capped at £50,000 these loans come with a 100% guarantor backing from the government. Applications for this loan scheme will open around 4th May and there are repayments or interest charges in the first 12 months - just remember what happens in month 13. We will issue more details on this as they become available.
Self Employment Income Support Scheme
Last but by no means least, the SEIS Scheme is aimed at providing some support for those businesses owners who are self employed. The grant paid out will be based on an average of the last 3 years taxable profits at a rate of 80% and capped at £2500 (similar to JRS).
HMRC will contact taxpayers mid May with payments expected to follow at the start of June.
There is quite a list of who is eligible for this scheme.
You can claim if you’re a self-employed individual or a member of a partnership and you:
have submitted your Self Assessment tax return for the tax year 2018 to 2019
traded in the tax year 2019 to 2020
are trading when you apply, or would be except for coronavirus
intend to continue to trade in the tax year 2020 to 2021
have lost trading profits due to coronavirus
You will need to confirm to HMRC that your business has been adversely affected by coronavirus. HMRC will as usual use a risk based approach to compliance.
Your trading profits must also be no more than £50,000 and more than half of your total income for either:
the tax year 2018 to 2019
the average of the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019
If you have not submitted 3 years tax returns:
HMRC will work out your average trading profit based on continuous periods of self-employment, which will be either:
the tax years 2017 to 2018 and 2018 to 2019
the tax year 2018 to 2019 only, even if you were self-employed in the tax year 2016 to 2017
The grant will be 80% of your average trading profit, divided by 12 which will give a monthly amount.
They will pay this or up to a maximum of £2,500 a month, whichever is lower.
They will pay the grant directly into your bank account, in one instalment.
You can also apply for Universal Credit whilst you wait for the grant and, if possible, you can still operate your business.
In relation to all grants received, please note:
JRS Grant - you still deduct Tax and NI from employees and as such are expected to make your monthly PAYE payments.
Business Grants - these don't have to be repaid but will be classed as taxable income in your business records.
Loans - do have to repaid but any interest charges are tax deductible.
Self Employment Grants - do not have to be repaid but will be classed as taxable income.
VAT on grants received - it is our belief that the above grants our outside the scope of VAT as not direct supply have been made in order to obtain them.
NOTE: the above information is subject to change by the relevant authorities but was correct at the time of this post.