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Coronavirus

SEISS grant |additional conditions

SEISS | The Self-Employment Income Support Scheme is being extended by Sunak, but these third and fourth grants less generous.

HMRC’s factsheet explains that to be eligible for the further grants, taxpayers must meet the following criteria:

  • Be currently eligible for the SEISS (although it is not necessary to have claimed the previous grants).
  • Be actively trading at the time the grant is claimed and intend to continue to trade.
  • Be impacted by reduced demand due to COVID-19 in the qualifying period.

The qualifying period for the third grant runs from 1 November to the date of claim and the qualifying period for the fourth grant is expected to run from 1 February 2021 to the date of that claim.

The requirements to be “actively trading” and to be “impacted by reduced demand” are new and HMRC is expected to publish further guidance to clarify the meaning of these terms.

The requirement to be actively trading will mean that businesses that have had to close during the pandemic will not be able to claim if they have not restarted during the qualifying period.

The policy decision has likely been designed to ensure that only viable businesses are supported and to align the scheme with the Job Support Scheme which will require employees to be working at least of a third of their usual hours.

The grants will be based on the same tax years as the previous grants, which means information on 2019/20 self-assessment tax returns that have been filed will not be considered.

The third SEISS grant will provide a taxable sum calculated as 20% of average monthly trading profits paid out in a single instalment covering three months’ worth of profits and capped at £1,875. This level has been set so as to offer broadly the same level of government support that is being provided to employees through the Job Support Scheme.

The level of the fourth SEISS grant is to be kept under review and will be set in due course.

HMRC will provide full details about how to claim on gov.uk and the Tax Faculty will publish more information as it becomes available.

2nd PoA deferred? | HMRC confirms no interest or charges

Under Coronavirus HMRC guidance, you were able to delay making your second payment on account for the 2019 to 2020 tax year, which was due by 31st July 2020.

Your June 2020 Self Assessment statements (a letter HMRC will have sent you) showed 31 January 2021 as the due date for paying the July 2020 Payment on Account.

This is because HMRC updated its IT systems to prevent customers incurring late payment interest on any July 2020 Payment on Account paid between 1st August 2020 and 31 January 2021.

HMRC will not charge interest or penalties on any amount of the deferred payment on account, provided it’s paid on or before 31 January 2021.

Winter Economy Plan | Rishi Sunak strikes again

Rishi Sunak announced a package of new measures to support the economy during the Coronavirus pandemic over the coming ‘winter’ months: including a new job support scheme, continuing reduced VAT rates, and additional time to pay deferred taxes.

In Summary

The ‘Winter Economy Plan’ came as the government cancelled the Autumn 2020 budget:

  • The ‘Job Support Scheme’
    which replaces the current Coronavirus Job Retention scheme (CJRS) which ends on 31 October. This also being mirrored for the self-employed.
  • Bounce-back loan changes
    ‘Pay-as-you-grow’ mean that loan repayments may be extended from 6 to 10 years, and the existing business loan schemes are to remain open until 30 November 2020 with another new scheme planned for January 2021.
  • Deferred Taxes
    Payment instalment options for businesses who have deferred their VAT until 31 March 2021 and for taxpayers who deferred income tax payments on account to 31 January 2021.
  • 5% VAT for hospitality
    An extension to the VAT cut for those in the hospitality and tourism industries until March 2021.

Here they all are in more detail

Job Support Scheme

The new scheme is to apply for 6 months from 1 November 2020 to April 2021.

  • Anyone employed as of 23 September 2020 will be eligible but employees must not be on a redundancy notice.
  • Employees must work at least 33% of their usual hours.
  • Employees should be paid as normal. For every hour not worked the employer and the government will each cover one-third of the employees’ usual pay, the government contribution to be capped at £697.92 per month.
  • The employer will be reimbursed in arrears as with the CJRS.
  • The employer must be a Small and Medium-Sized Enterprises (SMEs) or, if a large business, show that their turnover has fallen. The government expects that large businesses will not make capital distributions, such as paying dividends, whilst they are using the scheme.
  • There is no requirement for the employer to have previously furloughed workers under the CJRS.
  • The scheme can be used alongside the Job Retention Bonus.

See our practical guide video here:

Job Support Scheme | A practical run through

 

Self-Employed Grant extension

There is to be similar support for the self-employed by way of extending the Self-Employed Income Support scheme (SEISS) to April 2021.

  • A further two taxable grants each covering a three month period:
    • The first to cover November 2020 to January 2021 will be based on 20% of average monthly trading profits, capped at £1,875.
    • The details of the second grant, covering February to April 2021 are to be announced in due course.

Business funding and cashflow

Under the new ‘pay-as-you-grow’ terms of the bounce-back loan scheme loan repayments may be extended from 6 to 10 years.

  • Business who have taken bounce-back loans move temporarily to interest-only payments for periods of up to six months (an option which they can use up to three times), or to pause their repayments entirely for up to six months (an option they can use once and only after having made six payments) without it affecting their credit rating.
  • The terms of Coronavirus business interruption loans to be changed such that the government’s guarantee is extended to 10 years.
  • All business loan schemes are to remain open for new applications until 30 November 2020.
  • A new loan scheme is being devised for January 2021.

Deferred tax bills

  • Businesses who deferred VAT payments which were due between 20 March 2020 and 30 June 2020 to 31 March 2021 will now be able to pay these in eleven interest-free instalments.
  • Taxpayers who deferred their July 2020 Income Tax payments on account to 31 January 2021 will now be able to pay these over a twelve-month period.
    • This applies to taxpayers with liabilities under self-assessment of up to £30,000.
    • No specific announcement has been made about whether interest will be charged however as this will be under the existing time to pay arrangements it is likely that it will be.

VAT and the hospitality and tourism sectors

  • The temporary VAT cut, to 5%, for the hospitality and tourism sectors, was due to end on 12 January 2021 but has been extended to 31 March 2021.

Job Support Scheme | A practical run through

Salonfrog recorded a quick practical run through of Yesterday’s announcement by Rishi Sunak – around the Furlough scheme replacement – which is called The Job support scheme.

The scheme will run from 1 November 2020 for 6 months until April 2021.

In summary, you can reduce an employee’s hours down to a minimum of
1/3rd of their usual hours, paying them for the hours they work, and also paying them for 2/3rds of the hours they don’t work.

Our video explains this:

https://www.loom.com/share/6bb2b29422514dbfb64f195e48d06e6d

Furlough claim | letters from HMRC causing confusion

HMRC has started sending letters to hundreds of employers, asking them to review their CJRS claims. However, they don’t say which claim, or what they think is wrong with them!

HMRC estimates that 5% – 10% of CJRS grants contain mistakes or have been illegally claimed.

More likely, it is thought that there have been numerous small errors that all add up to a large number (offset to some extent by many that have under-claimed). The rules were fast changing and complicated in many areas, causing accountants and payroll bureaus many headaches along the way.

HMRC has said that it will focus on fraudulent claims and not on cases where the employer has made an innocent error. Its systems have initially highlighted 27,000 CJRS claims where something looks wrong, and it has selected 11,000 of those – hence the generic letters being sent out.

If you receive such a letter, it asks you to respond to HMRC by telephone, if you think the CJRS claim was correct but given the amount of time it can take HMRC to answer phone calls, it would be worth replying by email as well.

Salonfrog clients simply scan a copy of the letter to us and we deal with it.

£1500 grant for businesses hit by local lockdowns

Businesses in England required to close due to localised COVID-19 interventions will now be able to claim either £1,000 or £1,500 per property every three weeks, Chief Secretary to the Treasury Steve Barclay told MPs today.

To receive the grant, a business must have been required to close due to local COVID-19 restrictions. According to a government release on the new scheme:

  • if a business occupies premises with a rateable value less than £51,000 or occupy a property or part of a property subject to an annual rent or mortgage payment of less than £51,000, it will receive £1,000 for every three weeks it is required to close
  • if a business has a rateable value more than £51,000 or part of a property subject to an annual rent or mortgage payment of more than £51,000, it will receive £1,500.
    Payments are triggered by a national decision to close businesses in high-risk areas and are currently available in Blackburn with Darwen, Pendle, and Oldham as part of an ongoing trial scheme.

Local authorities will be responsible for distributing the grants and could add further eligibility criteria.

To help other businesses affected by closures which may not be on the business rates list, local authorities will also receive additional government support. Payments made to businesses from this discretionary fund can be any amount up to £1,500 and could be less than £1,000 in some cases.

The government also confirmed that local grants to closed businesses will be treated as taxable income. Businesses still closed at a national level (for example nightclubs) will not be eligible.

Chief Secretary to the Treasury Steve Barclay told MPs the grants provide businesses with “a safety net as they temporarily close their doors to help save lives in their local areas.”

Salonfrog supports NHBF’s #DoItRight campaign

Following months of closures, the majority of the hair and beauty industry has now reopened, which is great news. But with this comes a requirement for everyone to comply with the latest government guidelines. Government officials have warned the NHBF directly that they will close the hair and beauty sector if these guidelines aren’t followed.

In response, the NHBF has launched the #DoItRight campaign urging everyone to follow the health & safety measures required in England, Wales, Scotland and N Ireland to guard against spreading the virus.

Salonfrog is right behind this!

Furlough | don’t just kick the can down the road…

As well as keeping employees on furlough, you were able to bring them back on a part-time basis from 1 July 2020 and still claim the furlough grant for the time they weren’t working.

If you’re planning to have any employee remain on furlough (full or part-time) after July, you should think about the reasons why and also the increasing cost to you of doing so:

  • From 1 August
    you’ll no longer be able to claim any NI or Pension costs for those employees on furlough.
  • From 1 September
    you’ll still need to pay any employee on furlough 80% of their usual wage but can only claim 70% of it back – so you’ll have to take the 10% hit yourself.
  • From 1 October
    you’ll still need to pay any employee on furlough 80% of their usual wage but can only claim 60% of it back – so you’ll have to take the 20% hit yourself.
  • From 1 November
    the furlough grant disappears all together.

Don’t just kick the can down the road…

Your Salon is now open again and doing really well in these first few weeks, as Clients clamber over each other to get themselves spruced up after lockdown.

But the new ‘normal’ will soon be with us, and this could mean business as usual (as pre-lockdown) or a reduced demand (or somewhere in between).

With the continued requirement for PPE & sanitation unlikely to go away anytime soon, and possibly a change in your Clients’ behaviours (less cuts and colours per year?), we just don’t know what the ‘new normal’ will look like.

Anyway, it’s unlikely it’ll be as good as it is in these first few weeks of re-opening?

So it’s worth considering any of your staff still furloughed: if you don’t need them now, will you need them going forwards? Is it fair to keep them furloughed? Are you ok with the increasing cost of doing so? Or are you just putting the decision off?

It’s a tough thing to think about but something that needs to be done.

All the detail here:

Coronavirus Job Retention Scheme | Furlough part 2: June->October 2020

Self assessment POA due 31st July? | Delay it!

Deferring Self Assessment payments on account (POA)

If you are self employed, have property income,  or otherwise asked by HMRC to pay 2 instalments each year towards you personal tax liability, then the next one is due by 31st July.

However, this time you have the option to defer this payment until 31 January 2021.

HMRC has confirmed that there’s no need to let them know either: they will assume the deferral option has been taken if no payment is received.

HMRC has confirmed that it will not charge interest or penalties on the deferred POA, provided it is paid in full by 31 January 2021.

So your options are:
• defer payment of your POA in full up until 31 January 2021
• pay your July POA as normal by 31 July 2020
• pay your POA any time between now and 31 January 2021 (either as one payment or in instalments).

‘Flexible’ Furlough | The ‘HR’ admin

From 1st July, salon owners can bring back employees on a part-time basis and still claim the furlough grant for under the Coronavirus Job Retention Scheme – called CJRS v2.

Here we look at the ‘HR’ admin salon owners need to comply with:

Get it in writing

The salon owner needs each employee’s agreement to come back on a part-time basis and must confirm the arrangement in writing.

The new guidance says a “new” written agreement is needed.

Tax Journal says that:

“It’s not entirely clear if a letter amending an existing furlough agreement will comply or whether a completely new furlough agreement is required. The safest approach is to issue a new furlough agreement which sets out all the terms of flexible furlough.”

Can you change how much part-time they do later on?

Yes you can, since no minimum furlough period is required (under CJRS v1 it had to be a minimum of 3 weeks).

Tax Journal says that:

“The employer can enter into a flexible furlough arrangement with an employee more than once.
However, it’s likely to be administrative cumbersome as the employer would need to issue a “new” flexible furlough agreement each time and document the agreed flexible furlough arrangement.

Keep records of everything for 5 years, and in some cases for 6:

You must keep a written record of the furlough agreement for 5 years.

And you need to keep more information for six years:

(i) the number of actual hours an employee on flexible furlough has worked:

(ii) the number of hours the employee is furloughed (i.e. hours the employee is not working);

(iii) the amount claimed and the claim period for each employee;

(iv) the claim reference number;

(v) the calculations used when preparing claims; and

(vi) the “usual” hours of those on flexible furlough (including the calculations used to reach the figures).

Additionally, it’s suggest making a file note explaining any decisions taken in relation to furloughing employees.

Our thanks to Tax Journal for providing advice above.

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