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Coronavirus (COVID-19): Help for the Self-Employed

Coronavirus (COVID-19) Help for the Self-Employed

This evening the Chancellor Rishi Sunak announced the highly anticipated Self-Employed Income Support Scheme (SEISS) .

The government guidance gives a fairly concise summary of how the scheme will work and is found here: https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

However, I’ll summarise a little further here:

  • SEISS takes the form of 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.
  • Applies to Self-Employed Sole-Traders and partners of Partnerships as long as your tax returns are up to date, you’re currently trading and you intend to keep trading beyond this crisis.
  • Your trading profits must be under £50,000 to qualify for help.
  • To work out your average trading profits HMRC will use the values declared in your Tax Returns 2016/17, 2017/18 and 2018/19.
  • You do not need to contact HMRC to apply. HMRC will contact those eligible for SEISS and ask you to apply online.
  • Remember this grant is taxable income. It will also need to be declared as income if your claim Tax Credits or Universal Credit.

What questions now remain?

Where does this leave directors of small limited companies?

The last line of the SEISS guidance reads: “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.”

UPDATE 1 Apr 2020: See my post: COVID-19 Job Retention Scheme – Advice for Company Directors

Can the Self-Employed continue to work whilst claiming SEISS?

Yes. There is no restriction made due to claiming this grant. That of course is subject following the social distancing guidelines applicable to all as I’ve explained here Can the Self-Employed go to work?

In contrast employees being funded by the Job Retention Scheme are not allowed to work for their employer or take on any other employment during the term that they’re designated furloughed.

For a reminder on how to furlough a worker see here.

During the crisis I’ll be blogging about government help for small businesses as soon as the guidance is available. My previous COVID-19 post remain relevant and are:

What financial support is available for UK businesses?
Can the Self-Employed go to work?
Help for the Self-Employed and other FAQ’s

Enjoy saving tax? 

We have two videos to help on our YouTube-logo-full_color channel; and for regular tax-tips follow our blog on  or click +Follow at the bottom of this page.


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Coronavirus (COVID-19): Help for the Self-Employed and other FAQ's

Coronavirus (COVID-19) FAQ’s: What help is there for the Self-Employed / Small Company Directors? How to forlough employees etc.

Since my two posts Monday 23 March there have been no updates from the government. We are expecting more announcements but for now I hope that this post helps answer some of the most pressing frequently asked questions.

What financial help in there for the Self-Employed?

Regarding sole-traders / partners of a partnership – currently, very little. Extending the 80% funding of earnings to the self-employed has been discussed in Parliament but for now there are no official announcements.

You will likely qualify for the £73 per week Employment Support Allowance via the Universal Credit system.

My opinion: Don’t panic announcements of help for the Self-Employed are expected very shortly. If you’re allowed to work then considering doing so (see below).

Can the self-employed continue to work?

Yes in most cases. There has been a lot of misreporting on this issue along the lines of “non-essential work should stop”. This is not what the Prime Minister announced or what subsequent Government guidance states.

In truth its non-essential travel to work that should stop. The guidance states: “If you cannot work from home then you can still travel to work, provided you are well and neither you nor any of your household are self-isolating.”

True, non-essential shops and public spaces have been closed so in all cases please read carefully the guidance below before deciding if you can still go to work or not.

Government guidance on staying at home: https://www.gov.uk/government/publications/full-guidance-on-staying-at-home-and-away-from-others/full-guidance-on-staying-at-home-and-away-from-others

How to furlough workers and can directors be furloughed?

Any employee that has been out of work since 1 March (i.e. asked to stay home due to the COVID-19 crisis) can be designated as furloughed.

How to do it?

  1. Explain to your employee, first verbally and then in writing, that due to COVID-19 the workload is greatly reduced and you’d like to designate them as furloughed. You must have the employees consent. If they consent then they must stay at home and not take on any new employment.
  2. Agree with your employee the salary they’ll be paid whilst furloughed. Most employers are paying 80% of usual salary (if it varies then based on February’s pay) as this is the amount the government will fund (subject to the £2,500 per month cap). You can however choose to pay 100% but the difference will not be reimbursed by the government.
  3. Employers will makes claims for reimbursement via a HMRC system that is expected to be up-and-running before the end of April.

Can directors be furloughed like other employees?

UPDATE 1 Apr 2020: See my post: COVID-19 Job Retention Scheme – Advice for Company Directors

What about zero hours contract employees?

It seems that these can be furloughed and paid 80% based on their February pay but this guidance is not yet clear.

My opinion: If your business is coming to a standstill then furlough your workers now (even backdate to when they stopped coming to work). Directors don’t panic – I expect help for your earnings will be clarified along with help for the Self-Employed. If you’re struggling to pay the wages of furloughed workers contact your bank for a Business Interruption Loan (these are being processed quickly by most banks) which you can repay once the HMRC funding is processed.

I hope these FAQ’s help for now. I realise that many questions are left unanswered but I’ll aim to provide advice as soon as these issues are clarified.

Please ensure you’re up to date with my previous COVID-19 posts:

What financial support is available for UK businesses?
Can the Self-Employed go to work?

Enjoy saving tax? 

We have two videos to help on our YouTube-logo-full_color channel; and for regular tax-tips follow our blog on  or click +Follow at the bottom of this page.


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Coronavirus (COVID-19): Can the Self-Employed go to work?

Coronavirus (COVID-19) latest: Since the Prime Minister’s announcement this evening of a “UK lockdown” can the self-employed go to work?

The answer is, yes, you probably can. For full guidance and a list of industries which have been shut down (and cannot go to work) see the government guidance here:

https://www.gov.uk/government/publications/full-guidance-on-staying-at-home-and-away-from-others

Updates to follow as they happen.

Enjoy saving tax?

We have two videos to help on our YouTube-logo-full_color channel; and for regular tax-tips follow our blog on  or click +Follow at the bottom of this page.


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Coronavirus (COVID-19): What financial support is available for UK businesses?

Coronavirus (COVID-19): What financial support is available for small UK businesses?

Following is what we know so far. Clients will be updated as soon as possible on specific rules regarding eligibility and how to make claims once that info is available.

Coronavirus Job Retention Scheme

All UK employers will be given support in paying 80% of employees salaries up to £2,500 per month (for at least 3 months from 1 March 2020) for those employees that would otherwise have been laid off during, and only due to, the Coronavirus crisis.

How to claim – HMRC are working urgently to set-up a system but for now we know that you need to designate employees are “furloughed workers”, notify your employees and submit those details to HMRC (method of submission yet to be announced).

VAT payments

VAT payments falling due between 20 March – 30 June 2020 simply do not need to be made on time. This applies to all businesses but it’s deferment only. Any deferred payments will need to be caught-up by 31 March 2021 if not earlier. In the meantime VAT Returns must still be submitted on time. VAT Refunds will be processed as normal.

UPDATED INFO: HMRC ask that businesses please cancel their direct debits with their bank with the intention of setting these back-up again when you cash-flow allows you to make payments.

Self-Assessment payments for the Self-Employed

The usual payment on account due by 31 July 2020 does not need to be paid until 31 January 2021. This deferment will not attract penalties or interest. No application to defer is needed.

UPDATED INFO: Deferral of the July payment on account now applies to all taxpayers under Self-Assessment. There is no need to contact HMRC to arrange this.

HMRC will fund Statutory Sick Pay (SSP) for employees absent due to Coronavirus

Until now employers themselves have funded the £95.85 per week SSP paid to employees during sickness absence. However, starting 13 March 2020 HMRC will fund employers up to two weeks SSP per eligible employee (including directors of small limited companies) who is absent because of COVID-19 (infected, self-isolating etc). During the crisis SSP is payable from day 1 of absence rather than the usual day 4. Eligible employees are those earning at least £120 per week. The HMRC mechanism for repayment is being designed and yet to be announced.

Self-employed not eligible for SSP

The Self-Employed will qualify for Employment Support Allowance of around £73 per week from day 1 of COVID-19 related sickness (extended from the usual day 8). If already claiming Universal Credit then claims are to be made via that system.

Business Rates

Automatic business rates holiday for retail, hospitality and leisure industry for 2020/21. Local Authority will write to confirm – no action needed.

Automatic cash grants for retail, hospitality and leisure industry trading from business properties of up to £25,000 or £10,000 for properties with a rateable value under £15,000 (including those paying no business rates because of Small Business Rate Relief). Local Authorities are writing to affected businesses. No action or application is needed.

UPDATED INFO: The list of businesses to qualify for the grants is expanding. Of note, Estate Agents and Childcare Nurseries recently added.

Coronavirus Bounce Back Loan

The scheme helps small and medium-sized businesses to borrow up to 25% of their turnover, capped at £50,000.

The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. Details here.

Insurance

Unfortunately, most businesses are not specifically not insured for closure due to pandemics or government-ordered shut-downs. But, check your policy – if you are then insurers are reportedly dealing fairly with such claims.

Enjoy saving tax?

We have two videos to help on our YouTube-logo-full_color channel; and for regular tax-tips follow our blog on  or click +Follow at the bottom of this page.


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Selling a rental property? Tax now due within 30 days!

Here’s a few general tax updates for the new tax year starting 6 April 2020.

Selling a rental property in the near future?

If so please keep in mind that if exchange of contracts take place from 6 April 2020 onwards then a standalone online Capital Gains Tax Return must be completed and any tax paid within 30 days of completion. If you’re planning on selling a property – please let us know.

Source info: https://www.gov.uk/government/publications/capital-gains-tax-and-corporation-tax-on-uk-property-gains

Capital Gains on Cryptoassets

HMRC continues to update its policy papers on the tax treatment of crypto assets. The latest versions of their guidance for individuals and for businesses can both be found at https://www.gov.uk/government/publications/tax-on-cryptoassets

Delayed budget

This year’s Budget Day set for 11 March is much later than usual. Unfortunately this may delay some of our usual forward tax planning advice for the coming tax year.

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We have two videos to help on ourYouTube-logo-full_colorchannel; and for regular tax-tips follow our blog on  or click +Follow at the bottom of this page.


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Budget 2018 – Small Business Guide & Tax Rates

2017.03 Hammond BudgetHere’s a brief round-up of the main points from the Budget 2018 for you as a small business owner:

Personal tax-free allowance – to increase to £12,500 for 2019/20 (from £11,850)

Marriage Allowance – increase to £1,250 worth a possible tax saving of £250 (from £237)

VAT Threshold – has been frozen at £85,000 for a further two years (until April 2022)

Tax free dividend allowance – to remain at £2,000.

Corporation tax – to remain at the current rate of 19%.

Making Tax Digital – No further announcement meaning that HMRC push ahead with the incoming requirement for VAT registered businesses to maintain digital records from April 2019 – most such business will need to consider using cloud accounting apps.

IR35 – Rules which have seen many public sector contractors become employees are expected to be rolled out to private sector large and medium-sized businesses from April 2020.

National Living Wage – will increase to £8.21 starting April 2019 (from £7.83)

So, at what rate should you set your next year’s director’s salary and dividends? Bespoke advice will be sent to all clients in the coming months. In the meantime we have two downloads available:

Our Guide to the Budget 2018, and our most recent Tax Rates Sheet

Enjoy saving tax?

We have two videos to help on ourYouTube-logo-full_colorchannel; and for regular tax-tips follow our blog on
or click +Follow at the bottom of this page.


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Autumn Budget 2017 – Small Business Guide & Tax Rates

2017.03 Hammond Budget

An uneventful budget, thank you Phillip!
Here’s a brief round-up of the main points for you as a small business owner:

Personal tax free allowance – to increase to £11,850 for 2018/19 (from £11,500)

Marriage Allowance – increase to £1,185 worth a possible tax saving of £237 (from £230)

VAT Threshold – has been frozen at £85,000 for two years (there’s a hint that this could be lowered in line with other EU countries after April 2020)

Tax free dividend allowance – will be reduced to £2,000 (from £5,000) as we already knew from April 2018.

Corporation tax – to remain at the current rate of 19%.

Making Tax Digital – VAT registered businesses will be required to maintain digital records from April 2019 – meaning that most such business will need to consider using cloud accounting apps.

IR35 – Unsurprisingly, it was announced that HMRC will consult on reforms to IR35 for the private sector (public sector having already undergone reforms).

Self-Employed NI – Will delay the abolition of Class 2 NICs by a year until 6 April 2019. Class 4 will remain at 9%.

National Minimum Wage – increase to £7.83 starting April 2018 (from £7.50)

We have two downloads available for our clients:

Our Complete Guide to the Autumn Budget 2017, and our most recent Tax Rates Sheet covering 2016/17, 2017/18 and 2018/19

Enjoy saving tax?

We have two videos to help on ourYouTube-logo-full_colorchannel; and for regular tax-tips follow our blog on Google+ or click +Follow at the bottom of this page.


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Spring Budget 2017 – A Business Owners Guide

2017.03 Hammond BudgetSmall business owners will probably find that yesterday’s budget was not as bad as some of the headlines are making out. Yes national insurance will increase for the self-employed and company shareholders will again see an increase in their personal tax bills but a quick look at the numbers shows that, for now, these increases are likely to be modest.

Mr Hammond suggested that the self-employed earning below £16,250 will actually end up paying less National Insurance – and this seems about right. In fact even if profits were around the £25,000 mark then the increase (which will start from April 2018) will be only around £140.

As for small company owners that pay themselves using a mix of salary and dividends (for the best 2017/18 salary and dividend mix see here) the announcement means a basic rate taxpayer who receives £5,000 in dividends will have to pay an extra £225 tax from April 2018. A higher rate tax payer will pay an extra £975.

On The Bright Side

Very welcome was the postponement to Making Tax Digital for the self-employed which for those under the VAT threshold means that quarterly reporting will not now become mandatory until April 2018 (starting April 2020 for limited companies).

And any firm coming out of Small Business Rate Relief will receive an additional cap next year on increases of no more than £50 a month.

Download our more detailed guide to the budget (including current and newly announced tax rates and thresholds) here.

Enjoy saving tax?

We have two videos to help on ourYouTube-logo-full_colorchannel; and for regular tax-tips follow our blog on Google+ or click +Follow at the bottom of this page.