Self Employment Income Support Scheme (SEISS)
Emails, SMS messages and letters are being sent to taxpayers who HMRC thinks may be entitled to claim an SEISS grant. These are expected to arrive during the week beginning 4 May 2020, some letters may not be received until the following week.
Each taxpayer will receive one form of contact:
where HMRC holds an email address it uses that;
SMS is used where HMRC holds a mobile number, but not an email address; and
a letter is sent where HMRC holds neither.
This initial contact explains what the taxpayer needs to do to be ready to claim when the claims portal opens.
HMRC is contacting all those who may be eligible, but not all recipients will in fact be eligible. HMRC has selected the cases based on the information in the self assessment tax returns filed by the taxpayers and has carried out the necessary calculations and eligibility checks based on those figures. However, HMRC will not necessarily know whether the taxpayer meets the following conditions of the scheme:
traded in the tax year 2019/20;
are trading when they apply, or would be except for coronavirus;
intend to continue to trade in the tax year 2020/21; and
have lost trading profits due to coronavirus.
HMRC is providing an eligibility checker to help taxpayers to confirm whether they are eligible.
The eligibility checker is available on gov.uk and is open to anyone to use, not just those who have been contacted by HMRC.
The taxpayer enters their self assessment UTR and national insurance number and the checker confirms whether they are eligible. The taxpayer does not need to enter any information about their income.
The checker does not give any information about the amount of grant available. The checker does not require the taxpayer to log in to their government gateway account but, in the background, it does look at the tax return information held on HMRC’s system. The taxpayer is asked to provide an email address for further correspondence.
The eligibility checker can be used by agents who know their client’s self assessment UTR and national insurance number.
How to apply
Applications will open to taxpayers on a staged basis between 13 and 18 May, with the portal opening on different days for different taxpayers. HMRC will email taxpayers who have provided an email address (when using the eligibility checker or previously) to confirm when the portal is open for them. Taxpayers can also use the eligibility checker to find out whether the application portal is open for them.
Taxpayers then log in to their government gateway account (or select the option to create an account) to complete the application process. They are presented with a detailed calculation and are asked to:
read and accept the eligibility criteria;
complete declarations, including to confirm that the business has been adversely affected by coronavirus; and
supply the bank account details into which they would like the grant to be paid.
The taxpayer does not need to provide any information about their income – the calculations are all done by HMRC based on the tax returns submitted. HMRC will check the claim and expects to make payments from 25 May 2020 within six working days of the application being submitted.
Coronavirus Job Retention Scheme
Under the new Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis. The scheme, open to any employer in the country, will cover the cost of wages backdated to 1 March 2020 and will be open before the end of April. It will continue for at least three months, and can include workers who were in employment on 28 February.
To claim under the scheme employers will need to:
designate affected employees as ‘furloughed workers’, and notify employees of this change. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation; and
submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC will set out further details on the information required.
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
HMRC currently has the system in place for reimbursement, and claims for the grants are being deposited into bank accounts within 6 days of submission.
The next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments until the end of June 2020. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.
The deferral applies automatically and businesses do not need to apply for it. VAT refunds and reclaims will be paid by the government as normal. Please note that you may need to cancel direct debits to defer payment.
Self Assessment Tax Payments
Income Tax Self-Assessment payments due on the 31 July 2020 will be deferred until the 31 January 2021. This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.
HMRC Time to Pay
HMRC’s Time to Pay scheme can enable firms and individuals in temporary financial distress as a result of Covid-19 to delay payment of outstanding tax liabilities. HMRC’s dedicated Covid-19 helpline provides practical help and advice on 0800 0159 559.
Business Rates Holidays and Cash Grants
No rates payable for the 2020-2021 tax year for any business in the retail, hospitality or leisure sectors.
In those sectors, if your rateable value is between £15K and £51k, you'll also receive a cash grant of up to £25,000 per property.
Any business which gets small business rates relief, including those in the retail, hospitality or leisure sectors, will receive a cash grant of £10,000 (increased from £3,000 announced in the 11 March Budget).
The rates holiday and cash grants will be administered by local authorities and should be delivered automatically, without businesses needing to claim.
Coronavirus Business Interruption Loan Scheme
These should be available from Monday 23 March and are delivered by lenders that partner with the British Business Bank, including all the major banks. The lender receives a guarantee of 80% of the loan amount from the government.
They are available for UK-based businesses with a turnover of no more than £45 million and can provide for a facility up to £5 million. The borrower remains liable for 100% of the debt.
No interest will be charged for the first 12 months.
Statutory Sick Pay (SSP)
If you're a director of a limited company with less than 250 employees, you can pay yourself two weeks of SSP if you need to self-isolate subject to meeting the minimum payroll requirement for SSP.
The government will refund £94 per week, maximum £188, to your company.
It will also refund SSP for staff of businesses with less than 250 employees for up to two weeks.
Mortgage and Rent Holiday
Mortgage borrowers can apply for a three- month payment holiday from their lender. Both residential and buy-to-let mortgages are eligible for the holiday. It is important to remember that borrowers still owe the amounts that they don't pay as a result of the payment holiday. Interest will continue to be charged on the amount they owe.
Tenants can apply for a three-month payment holiday from their landlord. No one can be evicted from their home or have their home repossessed over the next three months.
Self-employed people can now access full Universal Credit at a rate equivalent to statutory sick pay (£94.25 a week). However, those applying for Universal Credit for the first time may have to wait up to five weeks to receive a pay cheque. This will provide funds in the meantime as the Self Employed Income Support Scheme (see above) will not be available until June.
The chancellor has announced that those that pay themselves a salary and dividends through their own company will not qualify for the same income support as the self employed.
If they operate a PAYE scheme and pay themselves a salary then in theory directors can be furloughed in the same way as other employees under the Coronavirus Job Retention Scheme (see above).
However, a condition of furloughing is that the individual must not undertake work of any kind for the company during this time. This is harder for a director to justify, particularly if they are the sole director.
It may be necessary for the director to notify all suppliers, customers and other business contacts that the business has been suspended pending the end of the Coronavirus crisis. In many cases this is impractical and undesirable because the director may wish to use this time working on improving the business so that when trading recommences the business performs well quickly. In these circumstances, furloughing is not permitted. Remember also that this only relates to PAYE income, not dividends.
Increasing directors salaries to secure higher relief from HMRC is not advisable. Salary increases that were already in the pipeline before the effects of the Coronavirus were known may be appropriate, but we have not yet seen the detail of how the scheme will work and you may find that the 80% is applicable to the salary at the time the measure was announced and future increases do not qualify. As direcors have had the tax benefit of minimum salaries for many years it would be very difficult to justify a salary increase to try and obtain a higher payment from HMRC.