Local Restrictions Support Grant for closed and open businesses

Closed Businesses

The Local Restrictions Support Grants (LRSG (Closed) and LRSG (Closed) Addendum: Tier 4) support businesses that have been required to close due to temporary local restrictions.

Businesses that were open as usual and were then required to close due to local Tier 2, Tier 3 or Tier 4 restrictions may be eligible for LRSG (Closed) or LRSG (Closed) Addendum: Tier 4.

Eligible businesses are entitled to a cash grant from their local council for each 14 day period they are closed.

The deadline to make an application is the 31st March 2021. You can find out more detail here:

Check if you’re eligible for the coronavirus Local Restrictions Support Grant (for closed businesses)

 Open Businesses

Businesses that have not had to close but which have been severely impacted due to local Tier 2 or Tier 3 restrictions may be eligible for LRSG (Open).

Eligible businesses may be entitled to a cash grant from their local council for each 14 day period under local restrictions.

Local councils have the discretion to provide grant funding for businesses under this scheme. They will use their discretion in identifying the right businesses to receive this funding, based on their application process.

To find out more, click on the link below:

Check if you’re eligible for the coronavirus Local Restrictions Support Grant (for open businesses)

Find out how to pay VAT deferred due to COVID 19

If you deferred VAT payments due between 20 March 2020 and 30 June 2020 and still have payments to make, you can:

  • pay the deferred VAT in full, on or before 31 March 2021
  • join the VAT deferral new payment scheme – the online service is open between 23 February 2021 and 21 June 2021
  • contact HMRC on Telephone: 0800 024 1222 by 30 June 2021 if you need extra help to pay

You may be charged interest or a penalty if you do not:

  • pay the deferred VAT in full by 31 March 2021
  • opt into the new payment scheme by 21 June 2021
  • agree extra help to pay with HMRC by 30 June 2021

To find out more regarding deferred VAT payments, click on the following link:

Pay VAT deferred due to coronavirus (COVID-19)

Is your business eligible for a Closed Business Lockdown Payment?

The Closed Businesses Lockdown Payment (CBLP) supports businesses that have been required to close due to the national lockdown that began 5 January 2021.

The Closed Businesses Lockdown Payment (CBLP) supports businesses that have been required to close due to the national lockdown that began on 5 January 2021.

Eligible businesses may be entitled to a one-off cash grant of up to £9,000 from their local council.

Local councils will pay the same businesses that are eligible to receive the Local Restrictions Support Grant Addendum for the national lockdown period that began on 5 January.

The deadline for the application for this payment is the 31st March 2021.

You can find out more about the payment here: Check if your business is eligible for the coronavirus Closed Businesses Lockdown Payment

Are you eligible for the Additional Restrictions Grant?

The Additional Restrictions Grant (ARG) supports businesses that are not covered by other grant schemes or where additional funding is needed.

The Additional Restrictions Grant (ARG) provides local councils with grant funding to support closed businesses that do not directly pay business rates as well as businesses that do not have to close but which are impacted. In addition, larger grants can be given than those made through LRSG (Closed).

Local councils can determine which businesses to target and determine the amount of funding from the ARG.

Eligibility

Local councils have the freedom to determine the eligibility criteria for these grants. However, we expect the funding to help those businesses which – while not legally forced to close – are nonetheless severely impacted by the restrictions.

This could include:

  • businesses which supply the retail, hospitality, and leisure sectors
  • businesses in the tourism and events sectors
  • business required to close but which do not pay business rates

Businesses excluded from the fund

You cannot get funding if:

  • your business is in administration, insolvent or has been struck off the Companies House register
  • you have exceeded the permitted subsidy limit

To find out more, visit:
Check if you’re eligible for the coronavirus Additional Restrictions Grant

Income tax, national insurance rates, 5% VAT and VAT registration limits

No changes to income tax rates and personal allowance frozen

The basic rate of income tax and higher rate remain at 20% and 40% respectively, and the 45% additional rate continues to apply to income over £150,000.

The personal allowance and higher rate threshold have been increased in line with inflation to £12,570 and £50,270 respectively for 2021/22. These thresholds will then be frozen until 2025/26 possibly yielding an extra £19 billion for the government.

There had again been rumours that the dividend rate might be increased, but dividends continue to be taxed at 7.5%, 32.5% and then 38.1%, depending upon whether the dividends fall into the basic rate band, higher rate band or the additional rate band. Note that the first £2,000 of dividend income continues to be tax-free.

National Insurance rates

The national insurance contribution (NIC) rates and bandings were announced 16 December 2020 to take effect from 6 April 2021.

Employees and the self-employed will not pay national insurance contributions (NIC) on the first £9,570 of earnings for 2021/22, an increase of £1 a week.

The employee contribution rate continues to be 12% up to the Upper Earnings limit £50,270, with the self-employed paying 9% on their profits up to the same level. Note that employer contributions will apply to earnings over £170 per week, £8,840 per annum which is also a £1 a week increase.

5% VAT rate for food, attractions and accommodation extended

In order to continue to support businesses and jobs in the hospitality sector, the reduced 5% rate of VAT will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises across the UK until 30 September 2021.

The 5% reduced rate of VAT will also continue to apply to supplies of accommodation and admission to attractions across the UK.

From 1 October until 31 March 2022 the rate will be set at 12.5% and will then revert to 20% from 1 April 2022.

VAT registration limit frozen at £85,000 until 1 April 2024

The VAT registration limit normally goes up each year in line with inflation but will remain at £85,000 for a further two years. Arguably this makes it easier for businesses to assess whether or not they are required to register for VAT as it is no longer a moving target.

Further packages of support for the high street and hospitality

New grants for high street businesses and hospitality sector

Businesses forced to close due to the Coronavirus lockdown will be eligible to apply for grants of up to £18,000 depending upon the rateable value of their business premises. Pubs, restaurants, hotels, gyms and hairdressers will be eligible for a grant of up to £18,000 per premises whilst non-essential retail businesses will be eligible to apply for a grant up to a maximum of £6,000.

The grants are intended to be a contribution towards the fixed costs of the business during the period that they have been unable to trade normally. Staff costs continue to be covered by the CJRS furlough scheme.

The government will also continue to provide eligible retail, hospitality and leisure properties in England with 100% business rates relief from 1 April 2021 to 30 June 2021. This will be followed by 66% business rates relief for the period from 1 July 2021 to 31 March 2022, capped at £2 million per business for properties that were required to be closed on 5 January 2021.

Unfortunately, the “Eat out to Help Out” scheme will not be reintroduced this Summer.

Extension of furlough scheme, self-employed grants and new COVID recovery loan

CJRS furlough scheme extended to 30 September

The current version of the furlough scheme that started on 1 November 2020 was scheduled to end on 30 April 2021. In order to avoid a “cliff-edge” with resulting widespread redundancies the chancellor has announced a further extension of the scheme and also a phased reduction in support to employers.

The CJRS furlough grant for May and June will remain at 80% of the employees’ usual pay for hours not working but it will then be limited to 70% for July and then 60% for August and September.

This phased reduction will operate in a similar way as in September and October 2020 with the employer being required to contribute the remaining 10% and then 20% of an employee’s regular pay so that they continue to receive 80% pay for furloughed hours.

In addition to the 10% and 20% contributions employers will continue to be responsible for paying employers national insurance and pension contributions on the full amount being paid to employees.

Contact us if you need assistance with your CJRS furlough claims.

Self-employed income support grants also extended

In line with the further extension of the CJRS furlough scheme for employees the chancellor has also set out further support for the self-employed. We had been waiting for the details of the calculation of the fourth SEISS grant covering the period to 30 April and we now know that the support will continue to be 80% of average profits for the reference period capped at £2,500 a month and can be claimed from late April. There will then be a fifth SEISS grant covering the 5 months to 30 September.

The chancellor has also bowed to pressure to extend the scheme to include certain traders who were previously excluded. Thus, those who commenced self-employment in 2019/20 will now be included provided they had submitted their 2019/20 tax return by 2 March 2021. This is potentially a further 600,000 traders.

Conditions for the fifth grant will be linked to a reduction in business turnover. Self-employed individuals whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £2,500 a month.

Those whose turnover has fallen by less than 30% will receive a 30% grant, capped at £950 a month. We are awaiting further details of this fifth grant.

New recovery loan scheme

The government has already announced a longer repayment period for “Bounce-back” and CBIL loans. From 6 April 2021 a new Recovery Loan Scheme will provide lenders with a guarantee of 80% on eligible loans between £25,000 and £10 million to give them confidence in continuing to provide finance to UK businesses. The scheme will be open to all businesses, including those who have already received support under the existing COVID-19 guaranteed loan schemes.

Corporation tax increase, super deduction for investment and three year carry back for losses

Corporation tax rates to increase to 25% but not for all companies

The UK corporation tax rate is currently one of the lowest rates of the G20 countries and the government states it is committed to keeping the rate competitive.

That should have the effect of encouraging companies to remain in the UK and companies to set up here. With other countries considering raising corporate tax rates the chancellor has announced that the UK will follow suit and consequently the rate will increase to 25% from 1 April 2023 where profits exceed £250,000.

However, where a company’s profits do not exceed £50,000 the rate will remain at the current 19% rate and there will be a taper above £50,000. Businesses will however be able to take advantage of new tax breaks to encourage investment in equipment and an enhanced carry back of losses.

Super-deduction for investment in new equipment

In order to encourage companies to invest in new capital equipment the chancellor announced a radical new “super-deduction” of 130% where they invest in new plant. This would mean that when a company buys plant costing £10,000 they would qualify for a £13,000 deduction in arriving at business profits.

The new deduction, which will run for two years from 1 April 2021, will not be available for motor cars. Certain assets such as fixtures in buildings will only qualify for 50% relief in the first year instead of the normal 6% writing down allowance.

Three year carry back of trading losses

Many businesses will have made a loss in the last year as a result of the Coronavirus pandemic and the difficult trading environment.

Trading losses can normally only be set against profits of the preceding accounting period or previous tax year in the case of unincorporated businesses.

The chancellor has announced that the carry back period will be temporarily increased to three years thereby enabling the business to obtain a tax refund. For companies this will apply to loss making accounting periods ending in the period 1 April 2020 to 31 March 2022. For unincorporated traders, the extended loss relief will apply to losses incurred in 2020/21 and 2021/22.

The amount of trading losses that can be carried back to the preceding year remains unlimited for companies. After carry back to the preceding year, a maximum of £2,000,000 of unused losses will then be available for carry back against profits of the same trade of the previous 2 years. There will be a similar £2,000,000 limit for unincorporated businesses.

Financial support for businesses during Coronavirus

Financial support for businesses during Coronavirus

Find out what financial support you can get for your business.
Published 3 April 2020
Last updated 12 November 2020
From: HMRC.gov.uk

National restrictions began in England on 5 November. Find out about the new restrictions and what you can and cannot do. A full range of business support measures have been made available to UK businesses.

This page help businesses find out how to access the support that has been made available, who is eligible, when the schemes open and how to apply.

Find out about business support

The Coronavirus Job Retention Scheme (CJRS), which was due to end on 31‌ October, will now be extended, with the UK government paying 80% of wages for the hours furloughed employees do not work, up to a cap of £2,500 for periods from 1 November.

You will need to pay all employer National Insurance Contributions (NICs) and pension contributions. You can choose to top up your furloughed employees’ wages beyond the 80% paid by the UK government for hours not worked, but you are not required to do so. There will be no gap in support between the previously announced end date of CJRS and this extension.

For more information, go to GOV‌.UK and search ‘furlough scheme extended’.

On 24 September, Rishi Sunak, the Chancellor unveiled the government’s plan to protect jobs and support businesses over the coming months.
– central to plan is a new Job Support Scheme and extension of Self Employment Income Support Scheme
– and over one million businesses will get flexibilities to help pay back loans

Support for workers

–  A new Job Support Scheme will be introduced from 1 November to protect viable jobs in businesses who are facing lower demand over the winter months due to coronavirus.  Under the six month long scheme, aimed at keeping employees attached to the workforce, the government will contribute towards the wages of those who are working fewer than normal hours due to decreased demand.  Employers will continue to pay the wages of staff for the hours they work – but the government and the employer will each pay one third of their equivalent salary for hours not worked.  This means employees who can only go back to work on shorter time will still be paid two thirds of the hours for those hours they cannot work.

  • In order to support only viable jobs, employees must be working at least 33% of their usual hours. The level of grant will be calculated based on employee’s usual salary, capped at £697.92 per month.
  • The Job Support Scheme will be open to businesses across the UK even if they have not previously used the furlough scheme, with further guidance being published in due course.
  • It is designed to sit alongside the Jobs Retention Bonus and could be worth over 60% of average wages of workers who have been furloughed – and are kept on until the start of February 2021. Businesses can benefit from both schemes in order to help protect jobs.
  • In addition, the Government is continuing its support for millions of self-employed individuals by extending the Self Employment Income Support Scheme Grant (SEISS). An initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus. The lump sum will cover three months’ worth of profits for the period from November to the end of January next year. This is worth 20% of average monthly profits, up to a total of £1,875.

Tax cuts and deferrals

  • The government also announced it will extend the temporary 15% VAT cut for tourism and hospitality sectors to the end of March next year.
  • In addition, up to half a million business who deferred their VAT bills will be given more breathing space through the New Payment Scheme, which gives them the option to pay back in smaller instalments, so rather than paying a lump sum in full at the end March next year, they will be able to make 11 smaller interest-free payments during the 2021-22 financial year.
  • On top of this, around 11 million self-assessment taxpayers will be able to benefit from a separate additional 12-month extension from HMRC on the “Time to Pay” self-service facility, meaning payments deferred from July 2020, and those due in January 2021, will now not need to be paid until January 2022.

Giving businesses flexibility to pay back loans

– The burden will be lifted on more than a million businesses who took out a Bounce Back Loan through a new Pay as You Grow flexible repayment system which will provide flexibility for firms repaying a Bounce Back Loan.
– This includes extending the length of the loan from six years to ten, cutting monthly repayments by nearly half. Interest-only periods of up to six months and payment holidays will also be available.
– We also intend to give Coronavirus Business Interruption Loan Scheme lenders the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.
– In addition, it was announced that the government will be extending applications for the coronavirus loan schemes, continuing to help over a million businesses until the end of November, meaning more businesses will be able to benefit from the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, the Bounce Back Loan Scheme and the Future Fund. This change aligns all the end dates of these schemes.

HMRC  – From 1 July, you are able to flexibly furlough eligible employees – what you need to do

– pay your employees’ wages for the time they’re in work and apply for a job retention scheme grant to cover the remainder of their usual hours for which they are still furloughed
– claim for further furlough periods as needed

What to do if you have over-claimed

– If you have over-claimed, you will be asked when making your next claim whether you need to adjust the amount to take account of a previous error and your new claim amount will be reduced to reflect it. You do not need to take any other action but should keep a record of the adjustment for six years.  If you’ve made an error in a previous claim, but do not plan to submit further claims, just contact HMRC to let them know; they will advise how you can repay the money.

Claiming for 100 or more employees?

– If you are claiming for 100 or more employees, search for ‘download a template through the Coronavirus Job Retention Scheme’ on GOV.UK.

Updated guidance on military reservists

– Guidance now confirms you can furlough an employee who is a military reservist returning to work following a period of mobilisation ending after 10 July – even if they haven’t been furloughed before.

Paying your employer National Insurance Contributions (NICs) and pension contributions

– A condition of the CJRS grant is that you pay the related PAYE tax, NICs and pension contributions due on wages and from 1 August employers are no longer able to claim for NICs and pension contributions.  If you think you may struggle to pay your PAYE tax and/or NICs from August, please contact HMRC as soon as possible, before they start action to recover unpaid debt as they may be able to give you time to pay.

More details about the extension to the Coronavirus Job Retention Scheme (CJRS)

Flexible furloughing

– From 1‌‌July 2020, you have had the flexibility of bringing previously furloughed employees back to work part-time.  You decide the hours and shift patterns that your employees will work on their return and you are responsible for paying their wages in full while working. This means that employees can work as much or as little as your business needs, with no minimum time that you can furlough staff for.
– Any working hours arrangement that you agree with your employee must cover at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for furloughed hours, you will need to report and claim for a minimum period of a week. You can choose to make claims for longer periods such as on monthly or two weekly cycles if you prefer. You will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.
–  If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules.

Employer contributions

From August, the government grant provided through the job retention scheme became tapered.  In October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
– the cap on the furlough grant will be proportional to the hours not worked.
– If you are a smaller employer, some or all of your employer NIC bills will be covered by the Employment.

Parents on statutory maternity and paternity leave who return to work in the coming months are eligible for the government’s furlough scheme even after the 10 June cut-off date

– The Coronavirus Job Retention Scheme (CJRS) has been extended until October, with new flexibilities introduced from 1 July allowing furloughed employees to return to work part-time.
– The government previously announced that to enable the introduction of part-time furloughing, and support those already furloughed back to work, claims from July onwards are restricted to employers who previously furloughed employees.  However, the Treasury confirmed that parents on statutory maternity and paternity leave who return to work after a long period of absence will be permitted to be furloughed.  This applies to people on adoption leave, shared parental leave, and parental bereavement leave, but only in circumstances where they work for an employer who has previously furloughed employees.

Self-Employment Income Support Scheme

If your business has been adversely affected by COVID-19 (coronavirus), eligible self-employed people will be able to claim a second and final SEISS grant in August; this will be a taxable grant worth 70% of their average monthly trading profits for three months, paid out in a single instalment and capped at £6,570 in total.

The eligibility criteria for the second grant is the same as for the first grant. People do not need to have claimed the first grant to claim the second grant.

It’s really important to note that the eligible individual must make the claim themselves. The process is simple: the calculation of the amount of self-employment support individuals is done for them.

Look after yourselves, stay safe and best wishes to you all, from the team at Douglass Grange

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