We hope that you are starting to feel the effects of the relaxation of lockdown and that life is starting to feel a bit more like normal. Although the wheels of business are starting to turn, many businesses are still feeling the effects of the past few months and it is important to know that the financial support remains in place for the next few months.
New Measures Announced by the Government During the Mini-Budget – Headlines So Far…
Rishi Sunak announced the mini-budget on 8 July and the following highlights were of particular interest:
- Stamp duty
Threshold increased to £500,000 from £125,000 until 31st March 2021. This is fantastic news that will get the housing market’s wheels in motion.
The rate of VAT in the hospitality sector will be reduced to 5% until 12th January 2021.
- Food and non-alcoholic drinks only form restaurants, bars, pubs, cafés and similar places
- Supply of accommodation and admission to attractions across the UK.
- ‘Eat out to help’ (EOH) discount scheme will cover days Monday to Wednesday in August.
- The EOH scheme will provide a 50% discount for sit down meals up to £10 per head.
- Cafes, pubs and restaurants and other eligible food service establishments will need to register for the EOH Scheme in order to make a claim.
In addition, various support below to keep unemployment to a minimum:
- The Kickstart Scheme
- Employers will receive funding of up to 100% of the National Minimum Wage from the Government for each employee (aged 16-24) covering a maximum of 25 hours a week.
- The Government will also cover the relevant employers National Insurance costs.
- The Government will also cover the relevant employer automatic enrolment pension scheme contributions.
- The individual must be on Universal Credit and deemed to be at risk of long-term unemployment.
- The funding will be for each 6-month job placement.
- The employer can top up the wages if they so wish.
- Incentives for companies who take on apprentices and trainees between August and January 2021.
- Businesses will be given £2,000 for each new apprentice hired under the age of 25 and £1,500 for those 25 years old and over.
- This covers the period from 1st August 2020 to 31st January 2021.
- This is in addition to the £1,000 Government payments already provided under the Education, Health and Care Plan.
- Furloughed employees
- Incentive of £1,000 per employee brought back into work until January 2021.
- Each employee must earn on average above £520 per month between November and January 2021.
- This will be paid in February 2021.
Lastly from the mini budget, up to £5,000 Green Home Grant is available to homeowners and landlords who make their homes more energy efficient.
Other updates and reminders from us:
Self-assessment payment on account
The second payment on account towards your 2019/20 tax liability would normally be due by 31 July 2020 but has been deferred until 31 January 2021. This is optional and there is no need to apply to have the payment deferred; we would recommend taking advantage of this additional time from HMRC if you need to but remember to keep track of the amount due as it will be payable in addition to any balancing payment for 2019/20 and the first payment on account for 2020/21.
VAT deferred payments
VAT payments due between 21st March and 30th June 2020 could be deferred until 31st March 2021 and no doubt many businesses have taken advantage of this. From 1 July 2020 all VAT payments falling due must be paid as usual. For any VAT payment which was not made during the deferral period, now might be a good time to put a savings plan in place. Within 9 months until it’s due, dividing your amount due by 9 and saving that each month will ensure that you’ve got the cash to cover it by March 2021.
Self-Employment Income Support Scheme – second grant
The deadline for claiming the first SEISS grant is 13th July 2020, so if you are self-employed and your business has been adversely affected by COVID-19 up to that date you have a few days left to apply.
The second grant is available to be claimed from 14 August 2020 and will be paid based on 70% of average profits (reduced from 80% paid for the first grant). It is available to those who are self-employed and continue to be adversely affected by COVID-19. You do not have to have claimed the first grant to be able to claim the second one. The deadline for claiming this second round is 19 October 2020.
Claims can be made through the SEISS claims portal – HMRC
SEISS checks – to be aware of
You claimed a Self-Employment Income Support Scheme (SEISS) grant. While it was a straightforward process, that’s not the end of the story as HMRC will be checking claims further down the line. What records do you need to back up your claim?
- Remember to record the SEISS grant as part of your business income. Keep a copy of the SEISS calculation that your grant was based on – this can be a screenshot of your online claim.
- Keep records which demonstrate the nature of the adverse effects to your business operations, e.g. business accounts showing a reduction in turnover, confirmation of any coronavirus-related business loans you have received, dates your business had to close because of lockdown restrictions, and dates you or your staff couldn’t work because of coronavirus symptoms, shielding or caring responsibilities because of school closures. HMRC has published examples of what it thinks counts as “adversely affected”, such as having to “scale down or temporarily stop trading because your supply chain has been interrupted, you have fewer or no customers or clients, or your staff are unable to come into work”
- Record pre-lockdown hours, customers and lost income to back up your claim. Collect evidence of how your business has changed now, in real time, before business gets going again, so you can be sure you get the facts correct.
Furlough – extended to October 2020
As many will be aware, the furlough scheme has been extended to October 2020 with contributions to made by employers from August 2020 onwards.
In addition, flexible furlough, i.e. allowing an employee to work some hours and then be furloughed for the remainder of their normal weekly contractual hours, is an option that’s now available to businesses but it isn’t mandatory. You can still permanently furlough employees up until 31 October 2020. However, you may only furlough an employee after 1 July 2020 (either on a flexible or permanent basis) if they were furloughed prior to 10 June 2020 . The only exception to this rule is where an employee who was on any type of family friendly leave, e.g. maternity, parental or adoption leave, prior to 10 June 2020 returns to work. They can be furloughed provided other staff within your business had been furloughed correctly. If you haven’t furloughed anybody, this option will not be available.
Dawn and Calum have been working flat out to make the Furlough claims submitted as soon as they can. Please send us the information regarding your Furlough as early as possible to avoid any delays.
Business Support Loans
It is still possible to apply for the various loan options available, as follows:
Bounce Back Loan – up to £50,000 can be borrowed; no interest or repayments for the first 12 months. The interest rate is 2.5% after the first 12 months.
Coronavirus Business Interruption Loan Scheme – up to £5m can be borrowed and the government will fund interest and fees for the first 12 months. The loan is repayable over 6 years.
We hope you found the above useful. Get in touch if you wish to discuss anything further.