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Employers and Employees
A. Working From Home
Working from home. Employees may have to work from home due to the Coronavirus. Any additional costs which arise because of this can either be reimbursed by the employer, or tax relief can be claimed directly from HMRC, as long as the expense is wholly, exclusively and necessary for the employment. Alternatively, HMRC allows a Home Working Allowance of £6 per week to be claimed from the 6th April 2020.
This means that if you work from home for a full year you can claim £312 from your employer. If you pay tax at 40% this could save you £124.80. If a couple are both working from home this means they could save £249.60 in tax.
B. Kickstart Scheme
The Kickstart Scheme has been set-up to provide six-month work placements for the unemployed who are on Universal Credits and aged 16-24. The Government will pay for 100% of wages, employer NI, and employers pension costs for 25 hours a week at the National Minimum Wage.
C. Flexible Furlough
Statutory Sick Pay (SSP) can be reclaimed by employers for absences due to COVID-19. SSP will also be payable from day one, rather than day four for people with COVID-19. Employers with fewer than 250 employees can reclaim up to 2 weeks SSP per eligible employee who has been off work.
Self-employed
The Self-employment Income Support Scheme (SEISS) is a taxable grant that allows the self-employed to claim 80% of average monthly taxable profits based on the last three years. This is up from the original announcement of 55% across the three months. The grant is capped at £7,500 in total for the three months.
If you are a parent and your profits dropped in 2018/19 you can use the higher profits from 2017-18.
The self-employed are not eligible for SSP. Instead, they can make a claim for Universal Credit or Contributory Employment and Support Allowance.
Loans
A. Business Bounce Back Loan
The Business Bounce Back Loan Scheme is for up to 25% of the business’s turnover capped at £50,000. The Government guarantees 100% of the loan, and there won’t be any interest or fees to pay for the first 12 months. After the 12 months the interest rate is 2.5% a year, and you can repay early with no early repayment fees. The repayment length of the Bounce Back Loans has been extended from six years to ten years. You can take one payment holiday of up to six months, and can move to interest only payments up to three time, each time lasting six-months.
The deadline for applying for a Bounce Back Loan has been extended to the 31st January 2021. There are 28 lenders taking park in the scheme, and you can find further details on the British Business Bank website.
B. CBILS
The Coronavirus Business Interruption Loan Scheme (CBILS) provides support to smaller businesses across the UK who are affected by the COVID-19 pandemic. The government will guarantee 80% of the finance the lender pays, and any fees for the first 12 months. To be eligible the business must be based in the UK and have a turnover of under £45 million. The loan can be for up to £5 million, repayable over a term of up to 6 years. Further details of the CBILS can also be found on the British Business Bank.
Find out how we can help you with business tax needs
Tax payments
Income Tax payments on account for the 2019/20 year normally due by 31st July 2020 can be deferred until the 31st January 2021, this is an automatic offer with no need to apply. Any payments under £30,000 can be paid over twelve months under the time to pay arrangements.
VAT
Temporary VAT cuts for hospitality and tourism. VAT on food, accommodation and entry fees to attractions have been cut from 20% to 5% until the 31st March 2021. The 5% rate applies to food and non-alcoholic beverages sold for on-premises consumption. It also applies to hot food and hot non-alcoholic drinks for takeaway. However, the 5% covers more than you might think.
The sleeping accommodation includes pitches for tents, and should mean that you can qualify for the reduced VAT rate.
The definition of hotel means that you don’t have to provide food or other facilities in order to qualify, you only need to provide sleeping accommodation to visitors, as long as you do it more than occasionally.
Serviced flats let out as holiday accommodation could also qualify for the 5% rate of VAT.
If you rent a boat out for somebody to sail in then this doesn’t get the reduced rate of VAT, but if the boat has sleeping accommodation and you rent it to them to sleep in then you get the reduced rate of VAT.
For admission to attractions the VAT rate is affected by the main supply not the incidental supply. This means that if you provide a brewery tour then the tour will be the main supply, and food or drink will be incidental, allowing the 5% VAT rate, but only if going on the tour is the main objective.
These wide-ranging definitions mean that it is well worth checking out whether your business is eligible.
Business Rates
Small businesses, with a single property with a rateable value of £12,000 or less, will continue to receive the full relief via Small Business Rates Relief, meaning no rates are payable.
There is a 100% discount of business rates for occupied retail, leisure and hospitality properties for the 2020/21 year. There is no rateable value list on the relief. This relief will apply to properties referred to as “hereditaments” which includes; shops, cafes, restaurants, leisure, and hotels. Eligibility is assessed and calculated on a daily basis by the local authority. There is no maximum rateable value for this scheme.
Nurseries will also have a 100% business rates holiday for the 2020-21 year providing the business is based in England, and the property is occupied by the provider on Ofsted’s Early Years Register.
Other Cash Funds
1. Local Lockdown Grants of between £1,000 and £1,500 will be paid to businesses in England who are required to close due to local lockdowns.
2. The Discretionary Grant Fund is for small and micro businesses not eligible for other grant schemes. The grant is for up to £25,000 and only for businesses which have under 50 employees, have been trading since at least 11th March 2020, have been impacted by the Coronavirus, and are not eligible for other Grant Funds.
Further details of the help available can be found using the Business Support Finder below.
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