A number of new supports have been announced for both self employed individuals and businesses who have been adversely affected by COVID 19.
Here we have summarised the details and provided key links to allow you to investigate further what you may be eligible to claim for, and as always our experts are here to provide additional support and guidance.
Spread the cost of your upcoming self-assessment tax bill over 12 months for tax liabilities of up to £30,000
From 1st October 2020, self-assessment customers can apply to HMRC online for additional support to help spread the cost of their tax bill over and up to a period of 12 monthly payments.
This online payment plan service already exists for customers with tax liabilities up to £10,000, but from 1st October 2020, HMRC has increased the threshold to £30,000 for self-assessment customers to help ease any potential financial difficulties they may be experiencing due to the coronavirus pandemic.
Once your 2019/20 self-assessment tax return has been submitted to HMRC, you will be able to use HMRC’s online self-serve tool to apply to pay the following in monthly Direct Debit instalments over a maximum of 12 months, provided the total tax due is less than £30,000:
- your deferred payment on account bill from 31st July 2020
- any additional ‘balancing payment’ owed for 2019/20
- your first payment on account for the 2020/21 tax year
Customers who wish to set up their own self-serve ‘Time To Pay’ arrangements must meet the following criteria:
- no outstanding tax returns, no other tax debts, and no other HMRC payment plans set up
- the debt needs to be between £32 and £30,000
- the payment plan needs to be set up no later than 60 days after the due date of the debt (i.e. before 1st April 2021)
Note that customers using this facility to pay their self-assessment tax bill will be required to pay interest on the tax owed from 1st February 2021.
Please be cautious of scams claiming to be from HMRC and offering to help you set up payment plans to pay any tax owed. These scams are likely trying to obtain your details in order to steal your money, and you should never provide your bank or card details. Please do not hesitate to contact us if you are in any doubt over this.
If your self-assessment debts are over £30,000, or you need longer than 12 months to pay your tax bill in full, then you may still be able to set up a ‘Time To Pay’ arrangement with HMRC but you will need to call the self-assessment payment helpline on 0300 200 3822 to discuss this with an advisor.
Claim the Job Retention Bonus
The Job Retention Bonus is a £1,000 one-off taxable payment to you (the employer) for each eligible employee that you furloughed through the Coronavirus Job Retention Scheme and kept continuously employed until 31st January 2021.
You’ll be able to claim the bonus between 15th February 2021 and 31st March 2021, and you do not have to pass this money onto your employee.
To be eligible for the bonus, each of your employees must have been paid at least the ‘minimum income threshold’ (£1,560 gross per month) throughout the tax months 6th November to 5th December 2020, 6th December 2020 to 5th January 2021 and 6th January to 5th February 2021.
You must pay your employee at least one payment of taxable earnings (of any amount) in each of the relevant tax months. The minimum income threshold criteria applies regardless of how often you pay your employees and any circumstances that may have reduced your employee’s pay in the relevant tax periods; such as being on statutory leave or unpaid leave.
HMRC will check that your employees have been paid at least the ‘minimum income threshold’ through the information contained in your Full Payment Submissions made via RTI.
You cannot claim the Job Retention Bonus until 15th February 2021 at the earliest, and HMRC will update their guidance by the end of January 2021 with details on how to access the online claim service via the GOV.UK website.
If you use an agent who is authorised to do PAYE online for you, then they will be able to claim the Job Retention Bonus on your behalf.
You will then have until 31st March 2021 to make a claim for the Job Retention Bonus, after which the scheme will close and no further claims will be accepted by HMRC after this date.
Further grants available under the Self-Employment Income Support Scheme (SEISS)
The scheme has been extended by six months to provide two further grants during the period from 1st November 2020 to 30th April 2021, which will broadly represent the same level of support for the self-employed as is being provided for employees through the ‘Job Support Scheme’.
To be eligible for the grant extension you must:
- currently be eligible for the Self-Employment Income Support Scheme (although you do not have to have claimed any previous grants through the scheme)
- be actively trading and intend to continue to trade
- be experiencing reduced demand due to coronavirus in the qualifying period (being between 1st November 2020 and the date of the claim)
The grants will be paid in two lump sum instalments each covering a three-month period, and will be subject to Income Tax and NIC (as before).
The first grant will cover a three-month period from the start of November 2020 until the end of January 2021, and HMRC will provide a taxable grant covering 20% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £1,875 in total.
The second grant will cover a three-month period from the start of February 2021 until the end of April 2021, and HMRC will review and set the exact level of the second grant in due course.
HMRC will update their guidance soon with full details on how and when to claim via the GOV.UK website.
Extension for VAT payments previously deferred under the ‘VAT Payments Deferral Scheme’
Businesses that have previously deferred VAT payments due from 20th March to 30th June 2020 under the ‘VAT Payments Deferral Scheme’ will now have the option to pay this in smaller amounts, spread over a longer period of time.
Instead of paying the full amount by the end of March 2021, you can apply to HMRC to make smaller payments up to 31st March 2022 on an interest free basis.
Those businesses that still can, or want, to pay their deferred VAT sooner than this can still do so by 31st March 2021.
More information on this scheme and how to ‘opt in’ will be available on the GOV.UK website in the coming months.
Introduction of the ‘Job Support Scheme’ from 1st November 2020
The ‘Job Support Scheme’ will open on 1st November 2020 and run for a period of 6 months.
The scheme is designed to protect viable jobs in businesses who are facing lower demand over the winter months due to Covid-19, who can support their employees doing some work, but that need more time for demand to recover fully before they can get back to operating ‘normally’ again.
For the first three months of the scheme the employee must work at least 33% of their usual hours, and the Government will then review this threshold for the remaining three months of the scheme.
The business must pay its employees for the hours worked (being at least 33%), but for every hour not worked by the employee the Government and the employer will each pay a third of the usual hourly wage for that employee; with the Government contribution capped at £697.92 a month. This will ensure that employees earn a minimum of 77% of their normal wages (where the Government contribution has not been capped), and can be illustrated as follows:
|Hours Worked (Minimum Requirement)
|Employer Contribution to Hours Not Worked (1/3 x 67%)
Government Contribution to Hours Not Worked (1/3 x 67%) *
* capped at £697.92 per month
Employees will not have to remain on the scheme throughout its duration and don’t have to work the same pattern each month, however each ‘short-term’ working arrangement must cover a minimum period of seven days.
Grant payments will be made in arrears to reimburse the employer for the Government’s contribution. Note the grant will not cover Class 1 employer NIC’s or pension contributions, and these contributions will still be payable by the employer.
Finally, employers using the Job Support Scheme will also be able to claim the Job Retention Bonus (see above) provided they meet the eligibility criteria for this.
Further details on this scheme, including a worked example, can be found in HMRC’s factsheet.
Should you have any further queries or require our assistance in relation to any of the above schemes, please do not hesitate to contact us.