LAST UPDATED 26 APRIL 2020
CORONAVIRUS FINANCIAL SUPPORT GUIDE
SCAM ALERT: YOU WILL NOT BE CONTACTED BY PHONE, TEXT OR E-MAIL REGARDING MAKING CLAIMS TO HMRC. IF YOU RECEIVE SOMETHING ASKING YOU TO CLICK ON A LINK OR PROVIDE INFORMATION, IT IS A SCAM.
INTRODUCTION
We understand that many of you will be understandably concerned and confused about the impact of the COVID-19 crisis on your business and personal finances. This document has been created to help you understand the support being made available to you by the government. We will endeavour to keep it updated with government guidance as they are released.
However, we believe we can best support you by discussing this personally so feel free to call our client partners/managers for further guidance.
The support available differs depending on whether you are:
• A business owner
• Self Employed
• Employee
1. BUSINESS OWNERS
1.1. Job Retention Scheme (updated 26th April 2020) - please see our FAQ for more details
1.2. Statutory Sick Pay (updated 26th April 2020)
1.3. Deferring VAT
1.4. Cash Grant (updated 26th April 2020)
1.5. Business Rates
1.6. Interruption Loan Scheme (updated 26th April 2020)
1.7. Insurance
1.8. Unable to pay a tax bill
2. SELF EMPLOYED
2.1. Self-employed income support scheme (updated 26th April 2020)
2.2. Universal Credit
2.3. Deferring Income Tax (updated 1st April 2020)
2.4. Time to Pay Offer
3. EMPLOYEE
3.1. Job Retention Scheme (updated 26th April 2020)
3.2. Statutory Sick Pay (updated 26th April 2020)
3.3. Working Tax Credit
3.4. Universal Credit
4. GENERAL
4.1. Mortgage Payments Holiday
4.2. Struggling to Pay Rent
4.3. Struggling to Pay Bills
4.4. Other Loans
1. BUSINESS OWNERS
1.1. Job Retention Scheme
HMRC will support your business by paying 80% of each of your employees’ salaries who would have been laid off during the crisis up to a maximum of £2,500 per month per employee plus Employers National Insurance and Auto-enrolment pension contributions due on that amount.
For example, you have one employee contractually earning £2,000 a month, you will be able to furlough them and pay them 80% of this, which is £1,600, and claim all of this from the government. If you have a second employee earning £3,500 per month then 80% would be £2,800 however this would be capped at £2,500. Although you are not obligated to do so, should you wish to pay the employee the balance of their contracted salary you will be able to do so but cannot recover any of that additional amount from the government.
When does it start? The scheme starts from the 1st March 2020 and lasts for 3 months. A further announcement was made by the Chancellor extending the availability of the scheme until 30th June 2020.
Who is eligible? All UK businesses regardless of size will be eligible for this scheme.
How long must an employee be furloughed for? You may cease a period of furlough at any time. However, a claim will only be accepted where the minimum furlough period for an employee is three weeks. You may furlough an employee again after a period of work but again the minimum of three weeks applies to each period of furlough
How do I apply for this scheme? Firstly, you will need to designate any of your affected employees as furloughed workers and then you will need to notify your employee of this.
HMRC’s online portal opened on 20th April 2020 and can currently be used to submit claims visit https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme
In order to make a claim you will need to be registered with HMRC for PAYE Online. If you are not, you may register. Alternatively where you use an agent to deal with your payroll they may be able to submit a claim on your behalf.
What information do I need?
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your UK bank account number and sort code
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your employer PAYE scheme reference number
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the number of employees being furloughed
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each employee’s National Insurance number
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each employee’s payroll or employee number (optional)
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the start date and end date of the claim
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the full amount you’re claiming, including employer National Insurance contributions and employer minimum pension contributions
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your phone number
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contact name
You also need to provide either:
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your name (or the employer’s name if you’re an agent)
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your Corporation Tax unique taxpayer reference
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your Self Assessment unique taxpayer reference
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your company registration number
Thompsons Comments: It is important to note that ‘furloughing’ an employee and where appropriate reducing their salary to 80% of their contractual entitlement (or £2500 whichever is the lower) is a formal change of their contract and, except in circumstances where your contracts include a provision to allow the employer to impose this (rare in our experience) you do need to follow a formal process – it is advisable to do this in writing. We do have some template documentation that can be used.
Company Directors can be furloughed and are able to claim the grant in respect of their salary. As with other employees, directors would need to have been on the payroll on 28 February 2020 and they cannot work while they are on furlough leave. We do not yet know the extent to which minor directorial duties would be disregarded, or whether the requirement that a furloughed employee should do 'no work' would prohibit this. However, any income taken as dividends or directors loan payments will not be included in the grant.
Useful links: https://www.icaew.com/insights/viewpoints-on-the-news/2020/mar-2020/coronavirus-job-retention-scheme-furlough-guidance
1.2. Statutory Sick Pay
Statutory sick pay is currently £94.25 per week.
The scheme will cover employees who:
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have Coronavirus
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cannot work because they are self-isolating at home
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are shielding in line with public health guidance
In a change to normal SSP rules, those employees eligible as a result of COVID-19 will receive SSP from their first day of absence, without the normal 3 day waiting period.
Who is eligible? The relief will be available to UK businesses with fewer than 250 employees as at 28th Feb 2020. As an employer, you should maintain records of staff absences and payments of SSP made. Alternatively you may wish to furlough employees and take advantage of the job retention scheme.
How do I apply for this scheme? The rebate scheme is currently being developed.
Thompsons Comments: Most payroll software has not been updated to handle this, particularly the eligibility from day one. It may therefore be necessary to fool your software into making the payment earlier. We would suggest, in the first instance, seeking guidance from your software provider or contacting us. If we prepare your payroll, we will deal with this for you.
1.3. Deferring VAT
Any VAT liabilities falling due between 20th March 2020 and 30th June 2020 will not need to be paid over to HMRC until the end of the financial year (31st March 2021).
However, this is not a relief and therefore the VAT will eventually have to be paid to HMRC. There will be no interest or penalties charged in the deferral period.
HMRC have confirmed that where a repayment is due, they will still deal with these as normal.
Who is eligible? All UK businesses regardless of size will be eligible for this scheme.
How do I apply for this scheme? The scheme is automatic; you do not have to apply for this scheme to HMRC.
Thompsons Comments: Please note that VAT returns due during this period will still need to be filed by the normal due dates.
If you normally pay your VAT by Direct Debit you will need to cancel your DD authority with your bank well before the normal collection date as HMRC will not stop the collection by DD if an authority is in place.
1.4. Cash Grant
Who is eligible?
a) All businesses which receive Small Business Rates Relief will receive a grant of £10,000 if their rateable value is less than £15,001.
b) Businesses in the retail, hospitality and leisure sectors who have a rateable value between £15,001 and £51,000 will receive a cash grant of up to £25,000.
How do I apply for this scheme? Most local authorities have an online application process. You should visit the website for your local authority and follow the links. Some authorities are sending out application forms in the post.
Thompsons Comments: Unfortunately, this grant is only available to those businesses who have business premises on which Business rates are (or would be payable). Therefore, if you work from home no grant will be available. These grants are non-repayable. It is worth noting that Small Business Rates Relief is different from the Small Business Rates Multiplier.
1.5. Business Rates
A business rates holiday period will come into effect for the tax year 2020 to 2021 for those businesses in the retail, hospitality and leisure business.
Who is eligible? Your business will be eligible if you fall into one of the following categories: Shops, Restaurants, Café’s, Drinking establishments, Cinemas, Live music venues, Properties for assembly and leisure, Hotels, Guest & boarding premises, Self-catering accommodation.
How do I apply for this scheme? This will automatically apply to your next business rates tax bill in April 2020.
1.6. Loan Interruption Scheme
A temporary loan scheme should be available from 23rd March 2020 to support small and medium sized businesses.
As a business you may be able to access a 12-month interest free loan because the government will provide a grant towards your first 12 months interest and any up-front fees payable for the loan. The scheme will support loans of up to £5 million in value.
Who is eligible? You will be eligible if your turnover is no more than £45 million per year and your business meets the other British Business Bank eligibility criteria. All major banks will be offering the loan once the scheme is launched.
How do I apply for this scheme? Talk to your bank as soon as possible and discuss your business plan with them.
Thompsons Comments: It is important to note that the provision of an underwritten guarantee by the government does not change the fact that this is a normal commercial loan. The banks will require normal evidence of the ability to service the loan and may well require personal guarantees from Directors before agreeing to advance credit in the form of a loan or other funding support (i.e. Overdraft, Asset finance etc). You should seriously consider the businesses ability to service the loan in the long term before considering any finance and if necessary, seek the guidance of a regulated financial advisor.
1.7. Insurance
Businesses that have cover for pandemics and government ordered closure may be covered. Speak to your insurance company to discuss your terms and conditions.
1.8. HMRC Time to Pay
The ability to ask HMRC for time to pay is nothing new. However, HMRC have announced that they have added further staff to a special call centre - HMRC Coronavirus helpline
Telephone: 0800 015 9559
Monday to Friday, 8am to 8pm
Saturday, 8am to 4pm
If as a result of COVID-19 you are facing difficulties paying any liability to HMRC you can contact them to discuss obtaining assistance.
Thompsons Comments: Please note that it is important not to use this as a short-term lending facility if you are unsure you would be able to meet the payments in the future.
2. SELF EMPLOYED
2.1 Self-employed Income Support Scheme (SEISS)
This scheme announced by the Chancellor of the Exchequer on 26th March 2020 is designed to support self employed individuals (including members of partnerships) who have lost income due to coronavirus.
The scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the three months to 30th June 2020. It has been confirmed that this may be extended if required.
Who is eligible?
You can apply for the grant if you are a self-employed individual or a member of a partnership and you:
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have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19
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have traded in the current tax year (2019-20)
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are trading when you apply, or would be except for COVID-19
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intend to continue to trade in the tax year 2020-21
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have lost trading/partnership trading profits due to COVID-19
You must also have trading profits of less that £50,000 and at least half of your total taxable income coming from self-employment in either:
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2018-19; or
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On average based on the previous three tax years (2016-17, 2017-18 and 2018-19)
How do I claim?
HMRC will use the data on your 2018-19 tax returns already submitted to identify those eligible.
How much will I get?
You’ll get a grant which will be 80% of your average profits from the following tax years:
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2016-17
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2017-18
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2018-19
Thompsons Comment: Unfortunately, the criteria do mean that anyone who has recently become self-employed or was already planning to cease trading will not be able to benefit from this scheme.
2.2. Universal Credit
As a sole trader or business partner you may be entitled to claim universal credits.
A minimum income floor will be based upon the number of hours you expected to work and the minimum wage for your age group. This minimum income floor is basically a figure that the system expects you to earn every month.
If you earn below the income set by the system, your benefits will not be calculated on how much you earn but will be calculated on how much the system expected you to earn every month.
What has changed? A new temporary scheme has been announced by the government to remove the minimum income floor. Therefore, universal credits will be paid based on your actual earnings which during these times may be below the minimum income floor.
Example: If your minimum income floor is set to £1,000 per month and your earnings were £600 for the month then your benefits would be based on earnings of £1,000, even though you earned £400 less. With the new temporary scheme, your credit award would be based on your actual earnings of £600 and so this would increase your universal credit claim.
How do I apply for Universal Credit? Apply online using the link https://www.gov.uk/apply-universal-credit. There is a Universal Credit Helpline which is open Monday to Friday between 8am to 6pm. The telephone number is 0800 328 5644.
Thompsons Comments: We are unable to assist with claims for government benefits.
2.3. Deferring Income Tax
HMRC have now clarified that all taxpayers who may have needed to make a second payment on account on or before the 31st July 2020 will have this payment deferred. The payment on account would have been calculated as 50% of your tax liability for the tax year 2018/19.
Example: If your income tax liability for the tax year 2018/19 was £5,000 then the first payment on account for 2019/20 will have been due by 31st January 2020 for £2,500 (£5,000 X 50%) whilst your second payment on account for £2,500 would be due for the 31st July 2020.
For those of you who needed to make a payment on account for the 31st July 2020, your payment will now be deferred until the 31st Jan 2021.
No penalties or interest for late payment will be charged in the deferral period.
How do I apply for this scheme? The scheme is automatic; you do not have to apply for this scheme to HMRC.
Thompsons Comments: HMRC have made a welcome clarification in confirming that this relief will now apply to all taxpayers regardless of whether they are self-employed.
3. EMPLOYEE
3.1. Job Retention Scheme
HMRC will be supporting your employer by reimbursing up to 80% of your normal wages (maximum of £2,500 per month) and so the cost to your employer will only be 20% of your total wage unless you have mutually agreed with your employer to reduce the amount of your contractual salary during your furloughed period. Each period of furlough must be a minimum of 3 weeks.
Your employer must not have laid you off work in order to apply for this scheme. The scheme is currently available until 30th June 2020.
What if I earn more than £3,125? Unfortunately, as 80% of this amount would exceed £2,500, the employer reimbursement will be capped at £2,500.
Example: if your total (normal) wages are £3,000 per month, HMRC will contribute £2,400. Your employer can choose, by agreement with you to pay the balance but will not be obliged to.
What if I am on a Zero-hour contract? The scheme covers all individuals under the PAYE scheme. Therefore, employees on Zero-hour contracts are also protected by the new scheme. Your ‘normal’ pay when you are furloughed will be calculated based on the higher of either:
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The same month last year; or
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Your average monthly earnings from the last tax year.
What if I am an agency worker? Where you are paid through PAYE you should be eligible to be furloughed. You will need to speak with the agency as your deemed employer.
3.2. Statutory Sick Pay
Statutory sick pay is currently £94.25 per week and is normally available from the 4th day of your illness. However, from the 13th March 2020, you will be eligible for SSP from the 1st day, if you:
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have Coronavirus
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cannot work because you are self-isolating at home
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are shielding in line with public health guidance
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If your employer agrees you can be furloughed as an alternative to being paid sick pay, providing you meet the criteria for the job retention scheme.
Do I need to provide a GP fit note for this scheme? There is no requirement for you to provide a GP fit note however if your employer requires one then you have been advised to obtain one from the NHS 111 online.
3.3. Working Tax Credit
If you work a certain number of hours and have an income below a certain level, you could get up to £1,960 a year in working tax credit. This is known as the basic element.
How has the scheme been changed? For those on working tax credit, your basic element will be increased by £1,000 for the next 12 months, making the basic element £2,960. The standard universal credit allowance will also increase by £1,000 for the next 12 months. How much you get depends on your earnings and other factors.
How do I apply for Working Tax Credit? Apply online using the link https://www.gov.uk/working-tax-credit/how-to-claim. You can find out more from the website or contact HM Revenue and Customs on 0345 300 3900 Monday to Friday between 8am to 8pm and Saturday 8am to 4pm.
3.4. Universal Credit
Universal Credit is a benefit you can claim if you’re on a low income or unemployed.
It might be worth claiming Universal Credit if:
• you’re struggling to pay the bills
• you’ve lost your job and have no income
• you have a disability or illness that stops you working
• you have expensive childcare costs
• you’re caring for someone
Who is eligible? To get Universal Credit you must:
• be 18 years old or over - or in some cases 16 or 17
• be under State Pension age - check your State Pension age if you’re over 60 years old on GOV.UK
• live in the UK - there are extra rules if you’re not a British citizen
• have less than £16,000 in savings
How do I apply for Universal Credit? Apply online using the link https://www.gov.uk/apply-universal-credit. The Universal Credit Helpline is 0800 328 5644 and is open Monday to Friday between 8am to 6pm.
Thompsons Comments: We are unable to assist with claims for government benefits.
4. GENERAL
4.1. Mortgage Payments Holiday
On the 17th March 2020 it was announced that homeowners including landlords of buy to let mortgages affected by COVID-19 can apply for a mortgage payment holiday of up to 3 months.
Will this affect my credit score? Many banks will have different approaches, so we suggest you speak to your bank to discuss your concerns.
What about interest payments on the help to buy scheme? On the 18th March 2020, the government confirmed it would offer interest free payment holidays to borrowers struggling to pay back their help to buy loans.
How do I apply for this scheme? Please get in touch with your bank for more details or alternatively you may be able to apply online to speed up the process.
Please note that some lenders may recalculate your monthly mortgage payments after 3 months and this may result in higher capital & interest payments.
4.2. Struggling to Pay Rent
The government has announced a ban on evictions - your landlord can’t start court action for at least 3 months. You should explain the situation to your landlord straight away as they might give you more time to pay. You will still need to pay your rent but if you fall behind then you will need to come to a payment plan with your landlord in due course to deal with the rent arrears. You can also check if you can get extra financial help.
If your landlord doesn’t offer to be flexible with your rent payments, it’s a good idea to pay as much as you can afford and keep a record of what you discussed. You should also contact your nearest Citizens Advice https://www.citizensadvice.org.uk/about-us/contact-us/contact-us/contact-us/. An adviser can help you explain things to your landlord. The Advice line is available 9am to 5pm, Monday to Friday 03444 111 444.
You may be entitled to benefits to help with housing costs if your income has reduced, even if you’re still working.
If Housing Benefit or Universal Credit doesn't cover all your rent and you need more money, you could make a claim for a discretionary housing payment (DHP). A DHP is extra money from your local council to help pay your rent.
You will only be able to apply for Discretionary Housing Payments (DHP) if you are:
• entitled to housing benefit or universal credit
• responsible for rent payments and need more financial help with housing costs
• receiving less than the maximum amount of housing benefit for your household
When you apply, be as clear as you can when you're explaining why you need a DHP. For example, you should explain:
• why you can't afford to pay the rent
• why you can't move somewhere cheaper
• if it's causing problems for someone you look after, like a child or elderly relative
• any evidence you have, like a letter from your doctor or details of debts you're paying off
You should also tell the council if you're waiting for them to decide whether you can get Housing Benefit.
If you apply on a paper form, it's a good idea to keep a copy of the form for your records.
4.3. Struggling to Pay Bills
There are things you can do if you’re struggling to pay things like energy bills because of coronavirus. It’s important you don’t ignore your bills. Speak to the organisation you owe money to - they might be able to help by letting you pay smaller amounts or take a break.
If you're at least 10 weeks pregnant or have a child under 4 years old, you might be able to get free vitamins and Healthy Start vouchers for milk, fruit and vegetables and infant formula milk.
To get the free vitamins and Healthy Start vouchers you must also be claiming either:
• Income Support
• income-based Jobseeker’s Allowance
• income-related Employment and Support Allowance - but only if you're pregnant
• Child Tax Credit - and your household earns £16,190 a year or less
• Pension Credit
• Universal Credit - and your household earns £408 a month or less
Ask your midwife or health visitor for an application form. You can also call the Healthy Start helpline on 0345 607 6823 and ask them to send you a form.
4.4. Other Loans
Many lenders are now revising their terms and conditions on your loans and credit cards. Get in touch with your lender to see how they can help you.
Thompsons Comments: Please note that our firm is not a regulated financial advisor and we cannot provide any advice on borrowing or financial service-related products. If you need advice on this, we can introduce you to a financial advisor.