Self-employed Income Support Scheme (SEISS)

We are drawing closer to the release of the scheme for the self-employed to claim the taxable grant from the government.

When you make your claim you will require to have the following information available:
•Self-Assessment UTR
•National Insurance number
•Government Gateway user ID and password – if you do not have a user ID, you can create one when you check your eligibility online * Please visit our YouTube Channel to see how to sign up
•bank account number and sort code you want us to pay the grant into (only provide bank account details where a Bacs payment can be accepted)

You’ll have to confirm to HMRC that your business has been adversely affected by coronavirus.

If you claim the grant HMRC will treat this as confirmation you’re below the state aid limits.

HMRC will check claims and take appropriate action to withhold or recover payments found to be dishonest or inaccurate.
https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#claim

Setting up a Government Gateway Account

Watch and subscribe to our YouTube channel for this and other help videos
Go to the link below (this is the next stage from the above link)
https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference
This is essential to progress a claim, before you click on the link you will need to have the following available –
•Self-Assessment UTR
•National Insurance Numbers
•Passport or drivers licence
 Please note: You will need to create your own Government Gateway account at this point as we will not be able to do this on your behalf.

Bounce Back Loan

For small businesses to borrow between £2,000 and £50,000. The Government will guarantee 100% of the loan with no fees or interest required for the first 12 months.
The scheme will be delivered through a network of accredited lenders. Who is eligible?
You can apply for a loan if your business:
• is based in the UK
• has been negatively affected by coronavirus
• was not an ‘undertaking in difficulty’ on 31 December 2019

You cannot apply if you are already receiving funding. See here for information on how to apply.

New updates have been released by Scottish and UK Government

The Scottish Government has issued an update on support for the self-employed and small businesses, the latest package will be broken into three separate funds totally £100 million.

The 3 groups are
• Vulnerable SME’s
• Newly self employed
• Creative, tourism and hospitality enterprises

We will be delving into this to see what this means for our clients and update you as soon as possible.

The Job Retention Scheme (JLS) has been extended up to the end of June 2020

The UK Government has launched a new support finder service to help support you and your business the link below will assist you

As an update on some of the measures that are available.

VAT

If you are registered for UK VAT and have a VAT payment due between 20 March 2020 and 30 June 2020 you have an option to defer the payment until 31 March 2021

July Payments on account

If you are due to pay a Self Assessment payment on account by 31 July 2020, you can defer payment up until January 2021. You will not be charged any interest or penalties during the deferral period.

Importantly, you do not need to be self-employed to be eligible for the deferment.

The deferment is optional. If you are still able to pay your second payment on 31 July, you should do so.

If you are self-employed (either as an individual or in a partnership), you can claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month, for 3 months. This may be extended.

Self-Employment

You may be eligible for this scheme if:

• you’ve lost profits due to coronavirus
• you’ve submitted your Self-Assessment tax return for 2018 to 2019 tax year
• you traded in 2019 to 2020 tax year
• you are trading when you apply, or would be except for coronavirus
• you intend to continue trading in 2020 to 2021 tax year
• your trading profits have been no more than £50,000 for either 2018 to 2019 tax year, or as an average of last 3 financial years
• your trading profits have been more than half of your total income for either 2018 to 2019 tax year, or as an average of last 3 financial years
• Trading profits do not include dividends paid from your own company to yourself.

Coronavirus Business Interruption Loan Scheme

If you are a small to medium-sized business (SME) you may be able to apply for a temporary loan, overdraft, invoice finance and asset finance of up to £5 million, for up to 6 years.

You may also be eligible for Business Interruption Payment to cover the first 12 months of interest payments and any lender fees. The government will give lenders 80% guarantee on each loan (subject to pre-lender cap on claims).

Self-employed people are also eligible for Coronavirus Business Interruption Loan Scheme.

You may be eligible for this scheme if you meet all of the following criteria:
your business is UK-based, with a turnover of no more than £45 million per year
you have a borrowing proposal which would be considered viable by the lender, if not for the current pandemic
you can self-certify that coronavirus (COVID-19) has adversely impacted your business
If you cannot pay your tax bill on time because of coronavirus, you may be able to delay it without penalty using HMRC’s Time to Pay service.

You may be eligible if you are a UK business that:
• pays tax to the UK government
• has outstanding tax liabilities

The above is not necessarily available to all businesses or individuals, we will of course help guide you where we can

https://www.gov.scot/news/lifeline-support-for-business-confirmed/
https://www.gov.uk/business-coronavirus-support-finder

Coronavirus Job Retention Scheme application process

HMRC have now released further details in order to prepare to make a claim through the Coronavirus Job Retention Scheme.

This evening HMRC has issued a release which advises on how and when to access the system will go live with some more information about what you will need to have ready before the system goes live but we or you CANNOT apply yet.

An important change to the scheme relating to employee eligibility came out today:

  • you can claim for employees that were employed as of 19 March 2020 and were on your PAYE payroll on or before that date; this means that you will have made an RTI submission notifying us of payment of that employee on or before 19 March 2020
  • employees that were employed as of 28 February 2020 and on payroll (i.e. notified to us on an RTI submission on or before 28 February) and were made redundant or stopped working for you after that, and prior to 19 March 2020, can also qualify for the scheme if you re-employ them and put them on furlough.

How to claim

As we prepare to make a significant number of claims, please note:

  • We will contact clients individually to process your claim, you should not call us on 20 April which is the date the online claim service will be launched on GOV.UK – we will not be able to access before that date
  • the only way to make a claim is online
  • claims will be paid within 6 working days; we will not be able to contact them unless it is absolutely necessary.
    As your agent we will make this claim for you if we prepare your payroll

But please note:

  • We must be authorised so please check your mail for any letters from HMRC with PAYE agent authorisation codes in name of Stephens Ward Group which means we can then make the claim on your behalf using our ID and password
  • Without these authorisations which clients will be aware we have been requesting for a number of weeks now we cannot process the claim then but will do as soon as authorised.
  • you will need to tell us which UK bank account you want the grant to be paid into, in order to ensure funds are paid as quickly as possible to you.

We will retain all the records required for this filing. We will not be aware until we process the first claim how much time will be involved in this process and will update accordingly on a client by client basis

Other things to mention
Following the backdated claims, claims can be made no more than 14 days BEFORE payrolls are run but will be accepted for different pay periods

Further guidance will be released by HMRC next week and we will then follow up with updates to you.

For information on all services please visit www.callanaccountancy.co.uk for a list of all services

Coronavirus Job Retention Scheme

Employers and Employees. Coronavirus Job Retention Scheme.

In the latest releases, HMRC has confirmed that salaried Directors can be furloughed, however, this does not include income paid by way of dividend, this is for salary only. This does though include salaried individuals who are directors of their own Personal Service Company.

Directors will still be able to carry out particular duties to allow them to fulfill the statutory obligations that they owe to their company, provided that they do no more than is necessary. The duties are set out in the Companies Act 2006. Any decision to furlough a director should be properly minuted and noted within the company records. Directors need to be aware that they cannot do work that would normally generate commercial income or provide services on behalf of the company.

Regarding employees, and this will cover the directors now, the Employer is responsible for operating the scheme and claiming on behalf of the employee

The employer and the employee must agree to the furlough position, please note that this must be clear and in writing.

Be clear that if you have furloughed an employee, they cannot undertake any work for the business.

In order for the employer to qualify, they must have the following

•A UK payroll
•A UK bank account
•The employee must have been on the payroll prior to 28 February 2020

You can be on any type of contract, including
•Temporary
•Zero-hour
•Apprentices can be furloughed; special rules apply

This is not expected to apply to Public Sector Employers

The guidance has been updated to explain that employers can furlough staff “if you cannot maintain your current workforce because your operations have been severely affected by Coronavirus (COVID-19)”.

To be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation. This includes providing services or generating revenue. Employers are free to consider allocating any critical business tasks to staff that are not furloughed. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.

If someone has left your employment, or they were made redundant after 28 February, you can re-employ them and furlough them and claim their wages through the scheme.

Importantly, the online service to make the claim IS NOT YET AVAILABLE, HMRC expects it to be available by the end of April 2020.

If you cannot maintain your workforce because your operations have been severely impacted by Coronavirus, you can apply for the grant that covers 80% of the usual monthly wage cost up to a maximum of £2,500, plus the associated employer National Insurance contributions and minimum automatic enrolment pension contributions on that particular wage.

The scheme is temporary and in place for 3 months commencing 1 March 2020, this may be extended if necessary.

Individuals who employ nannies can furlough them as long as they pay them through PAYE and they were on the payroll before 28th February

A possible catch is an employee working on reduced hours or pay, they will not be eligible, this requires some clarity from the Government and HMRC, and employees on statutory sick pay will remain on that until well enough, they can then be furloughed.

Employees with more than one job can be furloughed from both; however they can also continue to work for one whilst furloughed from another.

Employees on Fixed Term Contracts can also be furloughed and their contract extended, however if the contract is not extended they cannot be furloughed.
Individuals who may be eligible but are not considered to be employees include
Office holders (to include company directors)
Salaried members of an LLP (Limited Liability Partnership)
Agency workers through an umbrella company
Limb workers
HMRC guidance for each is below

Office Holders

Office holders can be furloughed and receive support through this scheme. The furlough, and any ongoing payment during furlough, will need to be agreed between the officeholder and the party who operates PAYE on the income they receive for holding their office. Where the office holder is a company director or member of a Limited Liability Partnership (LLP), the furlough arrangements should be adopted formally as a decision of the company or LLP.

Company Directors

As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.

Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.

This also applies to salaried individuals who are directors of their own personal service company (PSC).

Salaried Members of Limited Liability Partnerships (LLPs)

Members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through this scheme.

The rights and duties of a member of an LLP are set out in an LLP agreement and in the absence of an agreement, default provisions in the LLP Act 2000, based upon company and partnership law. Such an agreement may include separate agreement between the LLP and an individual member setting out the terms applicable to that member’s relationship with the LLP.

To furlough a member, the terms of the LLP agreement (or any such agreement between the LLP and the member) may need to be varied by a formal decision of the LLP, for example to reflect the fact that the member will perform no work in the LLP for the period of furlough, and the effect of this on their remuneration from the LLP. For an LLP member who is treated as being employed by the LLP (in accordance with s863A of ITTOIA 2005), the reference salary for this scheme is the LLP member’s profit allocation, excluding any amounts which are determined by the LLP member’s performance, or the overall performance of the LLP.

Agency Workers (including those employed by umbrella companies)

Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.

Furlough should be agreed between the agency, as the deemed employer, and the worker, though it would be advised to discuss the need to furlough with any end clients involved. As with employees, agency workers should perform no work for, through or on behalf of the agency that has furloughed them while they are furloughed, including for the agency’s clients.

Where an agency supplies clients with workers who are employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.

Limb (b) Workers

Where Limb (b) Workers are paid through PAYE, they can be furloughed and receive support through this scheme.

Those who pay tax on their trading profits through Income Tax Self-Assessment, may instead be eligible for the Self-Employed Income Support Scheme (SEISS), announced by the Chancellor on 26 March 2020.

Employees can provide volunteer work, as long as it does not involve providing a service or generate income for the business, similarly with training, this can continue as long as it does.
Some additional areas to be considered and noted, such as an employee pay varying, you can claim the highest of either
The same month’s earning from the previous year
The average monthly earnings for 2019/20
If the employee has been employed for less than 12 months, the claim os on their average monthly earning since they started work.

You can claim for any regular payments you are obliged to pay your employees, this includes wages, past overtime, fees, and compulsory commission payments, however discretionary tips and commission payments are not included.

Benefits in kind and salary sacrifice should not be included. COVID 19 also allows a change to salary sacrifice, however, advice should be taken in this regard.
What will be required when the claim is to be made
your ePAYE reference number
the number of employees being furloughed
the claim period (start and end date)
amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
your bank account number and sort code
your contact name
your phone number
You will need to calculate the amount you are claiming. Importantly, HMRC will retain the right to retrospectively audit all aspects of your claim, so please take great care when you are furloughing employees that you DO NOT contact them regarding work.

You should make your claim using the amounts in your payroll – either shortly before or during running payroll. Claims can be backdated until the 1 March where employees have already been furloughed.
If appropriate, worker’s wages should be reduced to 80% of their salary within your payroll before they are paid. This adjustment will not be made by HMRC. There is a minimum period of 3 weeks in place for furloughed staff, when they return to work they must be removed from furlough, they can be furloughed again if required, but each instance must be for 3 weeks minimum

Important note on treatment for Corporation tax treatment
Payments received by a business under the scheme are made to offset these deductible revenue costs. They must, therefore, be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.

Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

Furnished Holiday Lets

Owning Furnished Holiday Lets (FHL’S) has always brought with it some confusion over tax status.

With FHL’s you are not self-employed as you declare the income on the property pages of your tax return, but you benefit from relief at full on interest as you are treated as a business. You may qualify for Business Property Relief (BPR) on death as it is treated like a business; but not all the time, and there is never a guarantee that HMRC would accept a BPR claim.

Now though, we are in the eye of the COVID19 storm and looking for some guidance from the Government.

Owners must there consider carefully their own position and look at what support is available.

At the moment there are a host of support measures in place:

  • Finance through the Coronavirus Business Interruption Loan Scheme
  • Tax payment deferral for the self-employed
  • The Coronavirus Job Retention Scheme
  • Business rates holiday
  • Grant support connected to business rates status
  • The Self-Employed Income Support Scheme Taxable Grant

We have provided links on our webpage to the Government website providing as much details as is available.

How does this impact on your business, firstly let us look at what has been put in place:

If you are VAT registered there is an automatic deferral in place from 20th March up to 30th June, this has been deferred to the end of the tax year ended 5 April 2021.

If you have employees you can use the Self Employed Furlough Scheme which will allow up to 80% of the staff salary to be covered for a period up to the end of May, this may be extended, please ask before you do anything in this regard as there are procedures to be followed.

Business interruption loan scheme may be an option, but it is still only a loan, and care should be taken and options considered before taking out this type of loan.

If you are not working, then consider Universal Credit (UC), we have included links in previous newsletters to both the government site and UC calculators.

Business rates and Grant support are also considered and again we have mentioned this in previous Newsletters, however here is a link to the Scottish Government website with more up to date detail.

https://www.mygov.scot/non-domestic-rates-coronavirus/

We are also keeping a close eye on how the Self-Employed grant scheme is being rolled out, at the moment this is relevant to those who are self-employed and therefore by virtue of the fact that they complete the self-assessment pages of a tax return and not the property pages. We will continue to monitor this.

We will also need to keep a close eye on the days the property is let, we will hopefully see some relaxation on the rules, but again will report as soon as we are aware.

Other things to mention

There is still no further updates in the new grant form for Self Catering Non Domestic Rates Relief

We still await the process for the furlough employees and HMRC have still to release details but will not be available till end of January

We will have a comprehensive PDF available which will summarise most point of available support shortly.

We await support for directors of limited companies who are run on their own and what might be made available to support us.

Self Employed Support Coronavirus 26 March 2020

The Self Employed Income Support Scheme released by Chancellor Rishi Sunak this evening.

The Government will provide the self-employed with a taxable grant of up to 80% of their average monthly income taken over a 3 year period up to a maximum of £2,500 per month. If you do not have 3 years accounts, it will be based on best available data.

You will not qualify if you started after 6 April 2019 and only those who completed tax returns for the year ended 5 April 2019 and remain self employed will be included.

This will be available for an initial 3 months and may be extended if necessary. The payment will not be released until early June, but will be backdated. You will be able to claim the grant and continue to do business.

The grant will be available to people with trading profits of up to £50,000 and for those where the majority of their income comes from self employment. For those struggling right now, there are business interruption loans available.

If you have not submitted your tax return for the year ended 5 April 2019, you now have 4 weeks to do so. This is very important so if you know anyone who needs help ask them to get in contact.

Income tax second payments on account due on 31 July have been deferred until 31 January 2021. Access to Universal Credit is available and advance payments are in place rather than a 5 week check (as per the Chancellor)

There will be a form available for completion soon

Compliance checks will be added to this form

Coronavirus Business Support Fund

Councils have released online application portals to claim the grant available to help businesses deal with the impact of COVID-19.

The Scottish Government has now made available the Coronavirus Business Support Fund which are one of grants available to help protect jobs, prevent business closure and promote economic recovery.

How to Apply? Each council has made a portal available to click as shown below in the How to Apply section. There will be a click to the form and the details you need to supply and the email address to return completed form to. For businesses who do not pay rates we will update as details are released. A list of eligible business is available at Scottish Government website under business which qualify.

This is the link https://www.mygov.scot/non-domestic-rates-coronavirus/

Welcome to the new Callan Accountancy website

Thanks for visiting the new Callan Accountancy website. We’ll be posting interesting and helpful information on the News blog so please check back regularly.

If you have any questions about the service we offer or would just like some accountancy related advice please call us on 0345 541 1377 anytime. We deal with businesses all over Scotland and would be delighted to hear from you.