Support for the self employed?
There is currently nothing specific to support the self employed (apart from changes to Universal credit and other tax credits) as nearly all the measures announced relate to employers and employees.
The self employed make up around 15% of the workforce and the Government are under pressure to do more to help them. The self employed are potentially able to access interruption loans and defer July 2020 income tax payments (both discussed in this update) but this doesn’t seem to go far enough. We will update you when we hear more.
VAT and Income tax payments
VAT payments to be deferred for 3 months, this applies to VAT payments due between 20th March to 30th June. All businesses are eligible and no application is required. Businesses will have until March 2021 to pay VAT accumulated during the above period.
VAT refunds/reclaims will be paid as normal during this time.
Those self-employed with income tax payments on account due on 31 July 2020 will have those payments deferred until 31 January 2021. No applications required – this is automatic. No penalties or interest for late payment will be charged in the deferral period.
The HMRC time to pay scheme has been ramped up and you have a good chance of spreading or deferring existing tax payments (company tax, income tax, VAT, possibly employers PAYE/NI) by calling 0800 0159 559.
Job Retention Scheme (HMRC subsidising wages of employees laid off)
All business are eligible for this scheme, but it only applies to staff that are on the payroll (including directors), that can be laid off in their employment contract. To access this, you need to:
• Designate affected employees as ‘furloughed workers’ (furloughed means ‘temporary leave’) and notify your employees (if you have written employment contracts – check these, in case it does not provide for you to put employees on temporary leave; we have someone who can advise you)
• Submit employees details to HMRC through a new online portal (we are awaiting the link – this is likely to be during April)
• HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. Of course, employers can top up salaries further if they choose to.
Our comment: this is a much needed scheme, but we think it will be weeks before it’s up and running because HMRC’s current systems are not set up to facilitate payments to employers, in the meantime, you could consider getting a business interruption loan (more details below).
Rates holiday for; retail, hospitality, leisure businesses for 2020/21.
There is no need to apply, the local authority will automatically apply this to eligible businesses and will probably need to re-issue the rates bills they have already recently sent out.
Any businesses in Shropshire not covered by the above and still expected to pay rates can contact email@example.com to ask about spreading payments over 12 months.
Cash grants for business
Businesses in retail, hospitality and leisure sectors can get a grant of up to £25k per property.
Those businesses with a rateable value under £15k, will receive a £10k grant (we understand this smaller grant applies to all businesses listed under the business rates system with their local authority as far as we can tell).
As these grants are based on the business rates system, we think that those running these type of businesses that do not have a business property registered with the council may not be eligible for any cash grant.
You do not need to apply, the local authority will write to you (expecting this early April).
Last week, we sent a series of questions to Shropshire Council asking for more detail on eligibility but are as yet awaiting an answers.
Business interruption loan scheme
This is launching this week, delivered by the British Business Bank to provide access to loans and overdrafts. Full eligibility criteria will be available this week and we expect them to support those businesses who can show they have been viable up to now and are able to demonstrate viability in the longer term.
The first 12 months will be interest free. Terms will be from 3 months up to 10 years. All major banks will offer the scheme.
Further details can be found here
When applying for a loan under this scheme it’s likely your lender will want some financial information e.g last years accounts, possibly income and expenditure details for the current financial year (as all our business clients are on Quickbooks online/Xero, this is easily accessible and we can help with this).
Our advice: ensure your book keeping is up to date so that you are ready to supply current financial information, if asked. Contact your current bank initially as it’s likely they will be offering this special lending scheme but you can shop around with other banks as well, to get the best terms for your business. We can help with advice on; supplying information to banks, comparing loan options, discussing business viability and amounts of loans required. Some business sectors are excluded from the scheme including agriculture.
Check your insurance
Some businesses have insurance to cover them for ‘business interruption’ – check your policy. As the Government have ordered closure of pubs, cafes, leisure and hospitality businesses, the insurance industry has confirmed that this is sufficient to make a claim if you are covered for this type of event.