The COVID-19 crisis remains far from over and the Chancellor’s recent budget included a number of measures designed to aid businesses and individuals during the transition phase out of lockdown and back to some sort of normality. Here is a summary of the latest COVID-19 support measures from the budget and other COVID related issues:
Job Retention Scheme (furlough scheme)
The Job Retention Scheme (JRS), previously due to end on 30 April, will now be extended to 30 September. Employees will continue to receive at least 80% of their salary subject to the £2,500 cap. Employers will have to contribute 10% towards the scheme from July rising to 20% in August and September for the hours their staff do not work.
The extension applies to both full and flexible furloughed employees.
The extensions to the scheme mean that claims can be made for many employees recruited after the first lockdown who were previously ineligible. Calculating furlough claims can, however, be extremely complicated due the detailed rules.
Self-Employed Income Support Scheme (SEISS)
There are two further rounds of this scheme and this time it will also be open to claimants who started their self-employment in the 2019/20 tax year:
Grant 4 will take into account 2019/20 tax returns and will also be open to those who became self-employed during the 2019/20 tax year. The SEISS grant 4 covers February, March and April and will be set at 80% of 3 months’ average trading profits for 2019/20, paid out in a single instalment, capped at £7,500.
To be eligible for grant 4 the claimant must be self-employed or a member of a partnership. HMRC will determine eligibility by looking at the claimant’s 2019/20 tax return. Trading profits must not exceed £50,000 and be at least equal to 50% of the claimant’s total income for the year. For those that are not eligible based on their 2019/20 tax returns, HMRC will use the 2016/17, 2017/18, 2018/19 and 2019/20 tax years to calculate an average. Claimants will also need to have:
Claimants will also need to declare that:
The online claims service for grant 4 will be available from late April 2021 to 31 May 2021. HMRC have said that they will contact all self-employed individuals by mid-April with their claim dates (this will be the earliest date from which the claim can be made).
The SEISS grant 5 covering May to September will be available from late July for claimants that meet the eligibility criteria in a) to d) above.
HMRC have said that grant 5 will be determined by how much turnover has been reduced in the year from April 2020 to April 2021. More detailed guidance is due to be released in the coming weeks. Our understanding is that a comparison will be made between the claimant’s 2020/21 turnover and 2019/20 turnover to determine the grant to which they are eligible. Grant 5 will be worth either:
Newly self-employed in 2019/20
HMRC is asking some of those who started self-employment in 2019/20 and who are now eligible to claim grants 4 and 5 to complete pre-verification checks to confirm their identity and provide evidence of their trade. Those eligible should receive a letter between 8 March and mid-April 2021, notifying them that they will receive a phone call from HMRC within 10 working days. It is important that the call is taken to start the verification process, otherwise the SEISS grants cannot be claimed.
Recovery Loan Scheme
The recovery loan scheme (RLS) is being introduced from 6 April 2021. This will replace the other COVID 19 loan schemes, CIBLS, CLBLS and BBLS, which all end on 31 March. The RLS is intended to ensure that businesses of any size can continue to access loans and other kinds of finance once the existing loan schemes close. The scheme is expected to remain open until the 31 December 2021, although this will be subject to ongoing review. The government will guarantee 80% of the finance to the lender and loans will be available through a network of accredited lenders.
The key features are:
To be eligible to apply for the recovery loan scheme businesses will need to:
Businesses that have received support under the existing COVID-19 guaranteed loan schemes will still be eligible to access finance under the recovery loan scheme as long as all eligibility criteria are met.
Further details on how to apply and details of accredited lenders will be released in due course.
VAT deferral scheme
Businesses that deferred their VAT payments falling due between 20 March 2020 and 30 June 2020 should ensure that by the 31 March 2021 they either:
Self Assessment Tax Payments for 2019/20
Finally, for any Self Assessment taxpayers who still owe tax for the 2019/20 tax year, it is important that as much of this should be paid on or before 1 April as possible. Any of this tax not paid by the deadline will be subject to a 5% surcharge. This deadline is not applicable for taxpayers who have set up a Time to Pay arrangement with HMRC.
If you have any questions concerning these matters, or any of the COVID-19 support provisions, please do not hesitate to contact Charles Green on 020 8652 2450.