Spring Statement 2019 overview

COVID-19 Support Available to Personal Service Companies

The government has unveiled a £330 billion support package to help businesses through the COVID-19 crisis.

We have summarised below the help that is available to contractors and those operating through their own personal service company. Where the information is available, we also confirm how you can access this help. We will keep this page updated as the government announces further information.

Refund of Statutory Sick Pay (SSP)

Deferral of VAT payments

Coronavirus job retention scheme

Coronavirus Business Interruption Loan Scheme (CBILS)

Bounce Back Loan Scheme (BBLS)

Deferral of Self-Assessment payments

Extension available on Companies House filing deadline

Time to Pay helpline

Self-employed income support scheme

Refund of Statutory Sick Pay (SSP)

In circumstances where an employee is absent from work due to coronavirus or have to self-isolate in line with government guidance Statutory Sick Pay will be payable from day one of absence rather than day four. SSP remains at £95.85 per week.

SSP is ordinarily a cost for the employer however the government has confirmed that it will repay up to two weeks SSP for each employee that takes time off due to coronavirus.

Can I claim this?

If you are an employee of your personal service company and you pay yourself a salary of at least £118 per week then it is likely you will be able to reclaim the costs of two weeks SSP for yourself and any other employees that earn more than £118 per week.

How do I claim this?

The online portal to facilitate these claims opened on 26th May 2020, you can find out more about reclaiming SSP relating to coronavirus here.

What if I don’t qualify for SSP?

If you are not an employee of the business, or you pay yourself a salary below £118 per week you will be able to claim Employment Support Allowance or Universal Credit. This is claimed directly from the government and further information is available here.

Deferral of VAT payments

From 20th March to 30th June, you will not need to make payment of your VAT return, although you must still submit this to HMRC as usual. This means that for the quarters ending 29/02/2020, 31/03/2020 and 30/04/2020 no VAT payments need to be made. Whilst this is welcome news from a cashflow perspective you should be mindful that you will still need to pay this money, it has simply been deferred and must still be paid in full by 31st March 2021. If you can afford to pay this, you should consider doing so.

Can I claim this?

All VAT registered UK businesses can take advantage of this scheme. So, if you are VAT registered then you are eligible.

How can I claim this?

You do not need to apply for this. You simply don’t make your VAT payment in this period. You must still file your VAT return as usual and any VAT refunds will be processed as normal. If you have arranged a direct debit you will need to cancel this to ensure payment will not be taken.

The Coronavirus Job Retention Scheme (CJRS)

The government announced the Coronavirus Job Retention Scheme to help businesses to continue paying employees that otherwise may have been laid off. Under this scheme, businesses can access grants of 80% of their employees’ wages up to a total of £2,500 per month per furloughed employee plus any employers’ national insurance costs and minimum autoenrollment pension contributions.

Whilst this grant is taxable in that it will be treated as income in your accounts, the wages will be treated as an expense in your accounts and therefore there will be no Corporation Tax charge.

In order to access this scheme, businesses need to designate their workers as ‘furloughed employees’. A furloughed employee is an employee that remains on the payroll but is not working due to the coronavirus outbreak.

The government has confirmed that directors of Personal Service Companies can be furloughed and continue to complete their statutory filing obligations.

This scheme has been extended to 31st October 2020, with important changes announced by the chancellor on 29th May. The changes see the introduction of ‘flexible furloughing’. This could see you or your employees return to work a few days a week and continue to be furloughed for the remainder of the week, this could be useful for contractors who may be offered a tapered return to the office.

You will need to keep records of which employees were furloughed and for what period they were furloughed, this also applies for flexible furloughing.

June – The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3-week period prior to 30 June. This means you must furlough yourself or any eligible employees by 10th June 2020 to make a claim under the CJRS. Remember you will need to do this in writing, and keep a record of this for five years. Employers will have until 31 July to make any claims in respect of the period to 30 June. You must submit your claim for June before you can make your claim for July.

July – The introduction of ‘flexible furloughing’ from 1st July means employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked. Throughout July, the grant available remains at 80% of the furloughed workers wages up to £2,500 per month plus any employer’s national insurance costs and minimum autoenrollment pension contribution, for the time not worked.

August – The grant available will remain at 80% of the wage costs of the furloughed employee up to a maximum of £2,500 per month, however the employer will no longer be able to reclaim the cost of any Employers NI and auto-enrolment pension costs.

September – The grant available will fall to 70% of the wage costs of the furloughed employee up to a cap of £2,190 the employer must contribute 10% up to a cap of £2,500 and cover the cost of Employers NI and auto-enrolment pension costs.

October – the grant available will fall to 60% of the wage costs of the furloughed employee up to a cap of £1,875, the employer must contribute 20% of wages up to a cap of £2,500, and cover the cost of Employers NI and auto-enrolment pension costs.

It is important to note that this scheme will only cover your salary. If you pay yourself dividends this will not be included.

How do I claim this?

The portal to facilitate these claims is now open. If you are a client of First Freelance and you have authorised us to act as your agent, we will be able to make the claim on your behalf. If you would like us to do this and you believe that you meet the eligibility criteria, please get in contact with your accountant.

If you wish to make the claim yourself, you will need a PAYE online account and the following information:

  1. The number of employees being furloughed
  2. The dates employees have been furloughed to and from
  3. The name and National Insurance Number of each furloughed employee
  4. Your employer PAYE scheme reference number
  5. Your Corporation Tax Unique Taxpayer Reference
  6. Your UK business bank account details
  7. Your organisation’s registered name
  8. Your organisation’s address

You will also need to calculate the amount of the claim yourself and you should keep a record of how this was calculated.

HMRC have stated that there will be no verification email and so you should keep a record of your claim reference number.

You will receive payment into your business bank account once HMRC have verified your claim. This should be 6 working days after submitting your application.

You can find more information on how to make the claim yourself in this step by step guide.

Coronavirus Business Interruption Loan Scheme (CBILS)

The Coronavirus Business Interruption Loan Scheme is being implemented to encourage finance providers to continue lending to small and medium sized businesses amidst the crisis. The government will provide lenders with a guarantee of 80% on each loan and will support loans of up to £5 million. Can I claim this?

  • All UK business’ with turnover of less than £45 million per year
  • Further eligibility criteria can be found here

How can I claim this? All the major banks will be able to offer the scheme so you should speak to your existing bank as soon as possible. Further details of the scheme and a list of lenders is available here.

Bounce Back Loan Scheme (BBLS)

The Bounce Back Loan Scheme was announced on 27th April to help small and medium sized businesses to access finance.

An accredited lender can provide a loan from £2,000 up to 25% of a business’ turnover over a maximum term of 6 years. The maximum loan amount is £50,000.

The government will pay the first year’s interest payments and there are no repayments due from the customer for the first year of the loan. The interest rate is fixed at 2.5% for the term of the loan and there will be no early repayment penalties charged.

The scheme gives the lender a 100% government-backed guarantee and lenders are not allowed to request personal guarantees. This support from the government should mean lenders are more willing to offer help after growing pressure from small businesses about the difficulty in accessing finance.

The chancellor has announced that the application process will be a simple 7 question form and the borrower is required to self-declare they meet the eligibility criteria for the scheme. This will mean that those small businesses that were turned down for the CBILS, may be able to access finance here.

The scheme is open for applications from 4th May and you can find more information about how to access the scheme and a list of accredited lenders here.

Can I claim this?

To be eligible to apply for this loan you must:

  • be a UK business
  • have been negatively affected by coronavirus
  • not have been an ‘undertaking in difficulty’ on 31st December 2019

You cannot apply if you are already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS), however you can transfer your balance from the CBILS to the Bounce Back Loan Scheme if you wish.

The BBLS will initially be open for applications until 4 November 2020.

How can I claim this?

This scheme is provided through a network of accredited lenders and you will need to approach them directly online to apply for the loan. You can find the full list of accredited lenders here.

Deferral of self-assessment payments

The government announced that any self-assessment payments on account previously due to be paid on 31st July 2020 will be deferred until 31st January 2021.

Can I claim this?

The government announced these measures to help self-employed workers. If you are self-employed then you will qualify for this. At this stage it is not clear whether this will be extended to apply to limited company directors or other taxpayers that are required to file a self-assessment tax return. Regardless, should you anticipate that your earnings will reduce and therefore expect to pay less tax you can arrange for your payment on account to be reduced. We await further clarity on this.

How do I claim this?

You do not need to apply for this. Simply do not make your payment on account on 31st July 2020. There will be no interest charged or penalties. However, you must be mindful that this is not a grant, you will still need to make the payment with your payment for the 2019/20 tax year on 31st January 2021. Therefore, if you can afford to make the payment, you should consider doing so.

Extension to Companies House filing deadline

Businesses impacted by coronavirus can apply for an extension to their accounts filing deadline of up to three months. You will still need to apply for this. However, Companies House have confirmed that those citing issues around COVID-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete. Further information an applying for an extension can be found here. There is no change to the deadline for payment of your corporation tax.

Time to pay

A helpline has also been set up to help those who are unable to pay their tax bills to discuss Time to Pay support. If you believe you will be unable to pay a tax liability due to COVID-19 you can contact HMRC on 0800 024 1222.

Self-employed income support scheme

The Self-employment Income Support Scheme (SEISS) was introduced to support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19).

This scheme allows the self-employed to apply for grant of 80% of their average profits up to a maximum of £7,500 covering three months’ worth of profits.  To calculate your average income, HMRC will look at your last three tax returns. If you have not traded for three years HMRC will take the average of the tax returns you have submitted.

To be eligible for the scheme you must have taxable profits of less than £50,000, make the majority of your income from self-employment and have filed a 2018/19 tax return. The government gave late filers until 23rd April to get their tax return submitted.

On 29th May, Chancellor Rishi Sunak confirmed that the scheme will be extended and a second and final grant will be available from August 2020. As with the Coronavirus Job Retention Scheme the amount of the grant has been reduced. If you are eligible the grant will be worth 70% of your average monthly trading profits, paid out in a single instalment covering a further 3 months’ worth of profits, and capped at £6,570 in total.

It is important to note that this is a taxable grant and is effectively treated as income. You must make provision for the tax and National Insurance payments on this grant.

The government has been clear that this scheme will not be open to those workers operating through their own limited company. Instead you will need to consider if you are eligible for a grant under the Coronavirus Job Retention Scheme.

Here to help

If you would like to discuss the above further, please get in contact with your accountant who will be happy to offer support. Please be aware that due to the current circumstances your accountant will be working from home. Please contact them by email in the first instance and they can arrange a time to call you.

Published on: 24 March 2020 - By: First Freelance

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