Working with you to get the best for you and your business
Latest: 12.May 2020
Chancellor Rishi Sunak made an announcement this afternoon that the Coronavirus Job Retention Scheme will remain open until the end of October.
Self-Employed Income Support Scheme – SEISS – Covid-19: self-employed scheme opens early
The Treasury has formally launched the self-employment income support scheme (SEISS) for self-employed individuals or members of partnerships whose business has been adversely affected by coronavirus, with payments expected before the end of the month
The department says the scheme is up and running weeks ahead of its original schedule. From 8am today those eligible will be able to apply for a SEISS grant worth 80% of their average monthly trading profits.
Payments, to be paid in a single instalment covering three months and capped at £7,500, are expected to land in bank accounts by 25 May, or within six working days of each claim.
Rishi Sunak, Chancellor of the Exchequer, said: ‘We’re working ahead of time to deliver support to the self-employed and from today, applications open for the millions of people eligible for the scheme.’
Applicants will be given a specific date and time slot on which to make their claim on a day between 13-18 May, based on their unique tax reference number.
HMRC has assigned eligible self-employed individuals the specific date to apply on and this can be checked on HMRC’s online checker.
Mike Cherry, national chairman of the Federation of Small Businesses, said: ‘I would encourage all those who think they are eligible to use the online checker if they’ve not done so yet, and to apply on the date allocated.
‘We are particularly pleased to see the scheme opening earlier than scheduled, with a simple fast-track application and a promise for speedy payment.
‘Just like the job retention scheme portal we hope it will cope with the high expected demand.’
Brian Berry, chief executive of the Federation of Master Builders, said: ‘The self employed account for 40% of the construction workforce so the government’s decision to bring forward the payment to the end May will be very welcome news for the many independent tradespeople who operate in construction.’
However, the Low Incomes Tax Reform Group (LITRG) highlighted some of those eligible may have been missed out from HMRC’s contacts about SEISS, which have been made via email, SMS messages or letter.
Victoria Todd, head of LITRG, said this could include people who are self-isolating at a different address to where they usually reside or perhaps have changed address or mobile number but have not updated their contact details with HMRC.
‘We are concerned that self-employed people whose businesses have been affected by the coronavirus may miss out on claiming this grant because they were not aware that it was available. It would be very unfortunate if business owners who have seen a fall in trade because of the lockdown or Covid-19-related health reasons do not get the financial help they are entitled to,’ she said.
Todd also said there were worries that in some instances HMRC’s online checker may give an incorrect result about an applicant’s eligibility since it only checks some of the eligibility conditions.
‘We are aware that some people who think they are eligible are using the checker and receiving a ‘not eligible’ response. We suggest that you wait a couple of days and then try again. If it still shows you are not eligible then you can ask HMRC to review your eligibility,’ she said.
Individuals are eligible if their business has been adversely affected by coronavirus, they traded in the tax year 2019 to 2020, intend to continue trading, and they meet three conditions.
These are that they earn at least half of their income through self-employment; have trading profits of no more than £50,000 per year; and that they traded in the tax year 2018 to 2019 and submitted their self-assessment tax return on or before 23 April 2020 for that year.
HMRC calculates the amount to be paid to each eligible claimant based on an average of the tax returns for 2016/17, 2017/18 and 2018/19.
New Bounce Back Loan Scheme – 100% Government-backed guarantee – further information
Written 4 May 2020
Apply For A Business Bounce Back Loan (BBBL)
The Bounce Back Loan scheme helps small and medium-sized businesses to borrow between £2,000 and £50,000.
The government guarantees 100% of the loan and there will not be any fees or interest to pay for the first 12 months.
Loan terms will be up to 6 years. No repayments will be due during the first 12 months. The government will work with lenders to agree a low rate of interest for the remaining period of the loan.
The scheme will be delivered through a network of accredited lenders.
Guidance on how to apply is given on the British Business Bank Website: https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-schemes/bounce-back-loans/for-businesses-and-advisors/
- Find an accredited lender – there is a link on the above page;
- Approach them, ideally via their website;
- Complete a short application form which self certifies that your business is eligible for a loan under BBLS;
- If eligible you will need to complete the Banks Anti-Money laundering, fraud and Know Your Client checks;
- The lender makes a decision.
Talk to us if you need assistance in applying for a BBBL we will do our best to help.
Who is eligible:
Your business must be able to self‑declare to the lender that it:
- has been impacted by the coronavirus (COVID-19) pandemic
- was not a business in difficulty at 31 December 2019 (if it was, you must confirm your business complies with additional state aid restrictions under de minimis state aid rules)
- is engaged in trading or commercial activity in the UK and was established by 1 March 2020
- is not using the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS) or the Bank of England’s Covid Corporate Financing Facility Scheme (CCFF), unless the Bounce Back Loan will refinance the whole of the CBILS, CLBILS or CCFF facility
- is not in bankruptcy or liquidation or undergoing debt restructuring at the time it submits its application for finance
- derives more than 50% of its income from its trading activity (this requirement does not apply to charities or further-education colleges)
- is not in a restricted sector (see below)
Note: The above is not an exhaustive list – see The British Business Bank for more information.
Bounce Back Loans are available to businesses in all sectors, except the following:
- Credit institutions (falling within the remit of the Bank Recovery and Resolution Directive)
- Insurance companies
- Public-sector organisations
- State-funded primary and secondary schools
Please scroll the panel to the right for further information.
Keep your eye on Government advice: https://www.gov.uk/government/topical-events/coronavirus-covid-19-uk-government-response
Your main priority is to protect the health of yourself, employees and customers and then reduce the risk of the financial impact to your business.
Stay safe and talk to us – we are all in this together.
Covid-19: limited company directors have limited support
As the details of Chancellor Rishi Sunak’s ‘unprecedented’ package of support for individuals and businesses affected by the coronavirus pandemic emerge, directors of limited companies have found they risk falling between the two key schemes.
Published 30 Mar 2020
This group includes, for example, contractors, consultants and other off payroll workers who provide their services to an organisation via a personal services company (PSC) which is usually set up as a limited company.
Typically they are the director of the PSC and pay themselves a small amount in PAYE salary, drawing the rest as dividends from the company.
They had been hoping for help from the government’s self- employed income support scheme, offering a taxable grant of up to 80% of an individual’s average monthly profit over the last three up to a maximum of £2,500 a month for self-employed traders and the members of a partnership who have filed tax returns showing average profits below £50,000 for the previous three years.
However, Jeremy Coker, president of the ATT, pointed out: ‘Another group who are not technically self-employed, even if they might think of themselves that way, are individuals who have their own company and have taken their income from the company as a small salary and the rest as dividends.
‘Since dividend income is not classed as self-employment income for the purposes of the self-employed income support scheme there will be no additional support and such individuals will get much less than they might have hoped for.’
Directors of limited companies are, in some cases, eligible to make a claim under the coronavirus job retention scheme, which offers employers support for a salary subsidiary reimbursing 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
Kate Palmer, associate director of advisory at Peninsula said: ‘The scheme has been put in place to help employers who are unable to provide any work to their employees because of Covid-19 without having to resort to lay off or redundancy.
‘The guidance confirms that any UK organisation can access the scheme, including charities and public authorities, but mentions that the public sector is not expected to make use of the scheme if employers are receiving public funding.
‘Practical aspects of the scheme have now been explained. Under the new guidance, it is clear that employees can rotate around periods of furlough and work, provided that each period of furlough lasts for a minimum of three weeks.’
On the specific issue of directors of limited companies, Palmer said: ‘Directors can be furloughed provided they meet the definition of who can be furloughed e.g. must be an employee on PAYE and on the payroll on 28 February 2020.
‘Some directors will meet the PAYE criterion, some won’t. They will only get 80% of basic pay though, and they can’t do any work for the business during furlough.’
An HMRC spokesperson confirmed: ‘People who are paid a salary by PAYE can be furloughed for the job retention scheme but dividends are not covered by that or the self- employed scheme.’
This means that directors of limited companies would be able to claim 80% of their PAYE payments, but would not be able to work while doing so, and their dividend payments which make up the bulk of their income will not be taken into account.
Joanne Harris, technical commercial manager at SJD Accountancy, calculated that the majority of those operating PSCs paid themselves a monthly PAYE salary of around £719 in the 2019-20 tax year, meaning they would be eligible to around £575 a month in financial support from the government.
Andy Chamberlain, director of policy and external affairs at contractors’ trade body IPSE, said: ‘We are certainly disappointed that many of our members and other contractors who operate via a limited company will miss out on the level of support available to other self-employed workers.
‘We are frustrated with the lack of wider support for those who choose, or are sometimes simply required, to work in this way beyond loans and tax deferrals.
‘And I know that many will face a challenging few months with their income regardless of whether they are incorporated or not. IPSE will endeavour to push the government for more support and give you practical advice and guidance where we can.’
However, Chamberlain has drawn one positive message from recent developments, citing the Chancellor’s statement that as a result of government support, the self-employed would need to recognise the argument for equal treatment with those covered by PAYE employment status.
Chamberlain said: ‘But what was clear from the Chancellor’s stance, is that had limited company contractors been included in the package, we would have had little arguments left on IR35. The same “quid quo pro” would have applied.
‘But there is, however, one silver lining. The exclusion of contractors from the scheme highlights that we are right in our cause against IR35. How can the government justify treating contractors as “employees for tax purposes” when they’re carved out of support at this critical time?
‘In the same way that the government told us that contractors couldn’t have it both ways, then neither can the Treasury.
‘If ever there was a demonstration of the independence, self-resilience and downright “not-an-employee-ness” of contractors, this is it.’
Claim a grant through the coronavirus (COVID-19) Self-employment Income Support Scheme
Use this scheme if you’re self-employed or a member of a partnership and have lost income due to coronavirus.
Published 26 March 2020
From: HM Revenue & Customs
This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.
Who can apply
You can apply if you’re a self-employed individual or a member of a partnership and you:
- have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
- traded in the tax year 2019-20
- are trading when you apply, or would be except for COVID-19
- intend to continue to trade in the tax year 2020-21
- have lost trading/partnership trading profits due to COVID-19
Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:
- having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
- having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period
If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.
If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.
HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.
How much you’ll get
You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):
- 2016 to 2017
- 2017 to 2018
- 2018 to 2019
To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount.
It will be up to a maximum of £2,500 per month for 3 months.
We’ll pay the grant directly into your bank account, in one instalment.
How to apply
You cannot apply for this scheme yet.
HMRC will contact you if you are eligible for the scheme and invite you to apply online.
Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.
You will access this scheme only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.
After you’ve applied
Once HMRC has received your claim and you are eligible for the grant, we will contact you to tell you how much you will get and the payment details.
If you claim tax credits you’ll need to include the grant in your claim as income.
Other help you can get
The government is also providing the following additional help for the self-employed:
- deferral of Self Assessment income tax payments due in July 2020 and VAT payments due from 20 March 2020 until 30 June 2020
- grants for businesses that pay little or no business rates
- increased amounts of Universal Credit
- Business Interruption Loan Scheme
If you’re a director of your own company and paid through PAYE you may be able to get support using the Job Retention Scheme.
Published 26 March 2020
We also have sheets on the following: Business Information, A support Grant Funding Update and a sheet on Universal Credit (31.3.20)
If you would like to see these, please email email@example.com and she will send these on to you.
Meanwhile, look after yourselves, stay safe and best wishes to you all, from the team at Douglass GrangeGet in touch
At Douglass Grange we realise that we succeed if you succeed, and that we grow if you grow. So whether you are an individual or company you can be sure we will work with you to achieve your goals in a fast, friendly, and reliable manner.
Douglass Grange Chartered Accountants was formed in 2006, following the successful merger of two well-established East Lancashire practices.
With experience dating back over half a century, our dedicated team provides a comprehensive range of consultancy and compliance services, both to individual and corporate clients.