Coronavirus update 7 – 20 April 2020
More details on the support available
This newsletter is designed to bring you up to date on matters announced since our last general newsletter, and also on further developments with the Coronavirus Job Retention Scheme (CJRS) and the Self Employed Income Support Scheme (SEISS) that have been announced since our specific newsletters on those subjects.
ALL SELF-ASSESSMENT TAXPAYERS
I mentioned previously that the self-employed will not need to pay their second payment on account for 2019/20 until 31 January 2021. Normally this would have been due on 31 July 2020. HMRC will not charge any interest on the deferred tax payments.
The government have now announced that all individuals can defer their July payments until next January, so that will benefit everyone, including:
- Director/Shareholders who receive the bulk of their income as dividends.
- People who own and let out rental properties
- Individuals with high levels of investment income.
But do bear in mind that this is just an interest free loan – the tax will still need to be paid by next January. There is nothing to stop you paying in July as normal or paying by instalments if you wish to.
SUPPORT FOR THE SELF-EMPLOYED – SEISS
Further guidance has now been published on this scheme and following the information set out in newsletter 4, we can now confirm that:
- The trading profits used to calculate eligibility and the amounts of the claim will be the tax adjusted profits. Specifically, these are the amount shown on your personal income tax computation, not your accounts. So, for example, depreciation must be added back, but capital allowances are deducted.
- When working out the eligible profits, you should not deduct any losses brought forward. So that, generally, will be good news.
- On the other hand, when working out total income, you should not deduct items such as rental losses brought forward, or any other deduction from total income. This can mean that your other income is rather higher than would normally be the case, and this will be relevant when working out whether more than 50% of your total income comes from self-employed profits.
- If you have more than one trade, the profits and losses from your trades are added together to arrive at the qualifying profit.
HMRC have said that they will contact eligible recipients by mid-May, and then you will be invited to claim via the GOV.UK online service.
SUPPORT FOR EMPLOYERS - CJRS
The scheme went live yesterday (20 April) and applications can now be made for March and April salaries. From a purely practical point of view, claims should not be made until April’s salaries are known.
As advised in Newsletter 6, employers will need to be registered for PAYE Online to make a CJRS claim, or their payroll agents will need to have the appropriate registration. We can confirm that we are registered for on-line services for all clients for whom we maintain payrolls, but we know that other payroll bureaus are only registered as “file only” agents. If you use another payroll bureau, do check whether they can make the claim on your behalf. If they cannot, then you will need to do it yourself.
To enrol for PAYE Online, go to https://www.gov.uk/paye-online/enrol and we understand HMRC take around 7 working days to process your application. Once you are registered, the claim can be lodged via the HMRC portal at https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme . HMRC have said that they will make payments under the scheme after 6 working days, as long as the details provided in the application agree to HMRC records.
We have written separately to all clients for whom we maintain payrolls, but we do need confirmation from the clients concerned that they want us to make the claim on their behalf. If you have not replied to our email (sent last Friday) then please reply as soon as possible.
There was an announcement last week to say that the qualifying date for payroll schemes to be registered has changed from 28 February to 19 March, and that is potentially good news, Additionally the government stated that any employees who started work after 29 February but before 19 March could also be eligible for furloughing. BUT this only applies if the employee details had been notified to HMRC via Real Time Information (RTI) before 19 March. And given that almost all monthly payrolls would have been processed after 20 March, the RTI submission detailing the new employee(s) would not have been notified to HMRC in time. So we feel that it is pretty unlikely that many people will benefit from this, and we have yet to come across any cases that qualify.
HMRC have published a claim calculator https://www.tax.service.gov.uk/job-retention-scheme-calculator/?_ga=2.52551343.625791457.1587231130-1973134066.1580725690 to help you work out furlough claims, and this will be useful where staff are furloughed for part of the month. As a general principle (if you use this calculator), part months need to be calculated on the basis of the number of days of furlough divided by the number of days in the month. But this is not the only way that calculations can be made; for example, if one used working days that would give a different result. You may decide to accept HMRC’s calculations, but if not, HMRC have said that they “will not decline or seek repayment of any grant based solely on the particular choice of pay calculation, as long as a reasonable choice of approach is made”.
Further examples are given in https://www.gov.uk/guidance/work-out-80-of-your-employees-wages-to-claim-through-the-coronavirus-job-retention-scheme, including guidance where there is variable pay.
Guidance has also been published to say that the nil rate bands for employer’s national insurance contributions and minimum auto-enrolment pension contributions should also be apportioned on a daily basis. This does have the effect of reducing the claim a bit, but any differences should not be that material.
Please note that the HMRC calculator is rather limited, in that it cannot cope with variable pay, and nor can it deal with situations where pay is topped up. HMRC are promising improvements in the future, but it is not clear when this might happen. If you use the HMRC calculator, print out the results; if you don’t (or can’t) then keep a record of how you calculated the claim. Remember that HMRC does retain the right to check claims at some (unspecified) point in the future.
Interaction of the CJRS with Employment Allowance (EA) has provoked a number of questions, and HMRC have said that you cannot claim employer’s NI on furloughed salary if that NI is covered by the EA. So whether you claim EA for April 2020 will depend on whether all of your staff are furloughed or not, and also whether you are likely to use the full £4,000 allowance in 2020/21. A general newsletter such as this cannot really advise you what to do – contact us if you are in doubt or need guidance.
And finally, on this topic, the government have confirmed that CJRS will be extended to at least 30 June – previously it was only due to run to 31 May.
The grants payable to all businesses with rateable values below £15,000 (grant of £10,000), and the grants paid to those in the retail, hospitality and leisure sectors (£10,000 or £25,000), are now being paid by Ashford Borough Council, and hopefully other Councils are now sending out payments. Please note these are grants, not loans, but they will form part of your taxable profits.
If you pay business rates on a property that is available as a holiday let, and your rateable value is below £15,000, you should qualify for the £10,000 grant.
And finally, do remain on your guard against scams – there have already been several fraudulent emails circulating on the back of the CJRS, which generally aim to obtain bank details, passwords etc. Remember that CJRS must be claimed through the GOV.UK official portal, and do not respond to emails that are purportedly inviting you to claim via websites that do not start with www.gov.uk/
If you have any questions, please do email your regular contact or at firstname.lastname@example.org. Thank you again for your positive responses to our newsletters, and these are now all posted onto our website at https://www.busbys.co.uk/Coronavirus/