Firstly, we at Broadwing want you to know that we are doing everything we can to keep up to date with the financial help that you as clients can access to see you through this Coronavirus period and beyond. It will almost certainly have an impact on the majority of businesses at some point. We all need to stick together at this time and Broadwing are there for you.
The government have offered a number of measures to help businesses through this crisis and gradually we are understanding more of the detail. Therefore, we outline below what those measures are in a fairly brief form. You must feel free to call us if you need any specific advice or clarification. Direct Lines are as follows and either of us will be helpful and understanding: –
Brian 01604 328328
Martin 07891 382090
Self employed and small company owners with no premises or staff
This has been the most controversial group as far as government help is concerned and they have frankly felt left out.
Finally Rishi Sunak announced on 26 March 2020 a scheme to help the self-employed. Broadly this is it:
- A taxable payment of 80% of an average of the last 3 years profits as declared on Self-Assessment tax returns, capped at £2,500 per month.
- Still be self employed now and profits down due to Covid-19
- Only available if over 50% of your income came from Self-Employment for 2018-19 and for the average of the last 3 years submitted.
- Not available to anyone who’s profits have averaged over £50,000 per year.
- Payable for up to 3 months and may be extended
- Only available if you submitted a tax return with Self-employed income for 2018-19
- If you are late filing your Self-Assessment tax return you will have 4 more weeks to submit last year’s return and still qualify. Deadline April 23rd
- Scheme up and running by the beginning of June.
In the meantime, your only option is to claim Universal credit and Employment support allowance (equivalent to SSP), and this is proving to be extremely difficult given that the systems were already under enormous pressure and an extra 500,000 people have tried to submit a claim this week. Needless to say, the phones are tied up. Rishi promised in his response to a question that cash advances will be paid immediately. All this might seem quite poor however, this is what Martin Lewis off Money Saving Expert is saying:
“Don’t dismiss universal credit. The changes are bigger than you think – especially for housing costs. Universal credit is a benefit available to many who are employed, self-employed, unemployed or on low incomes (but usually not pensioners), provided you’ve less than £16,000 savings in your household.”
Last week, most people focused on the ‘£1,000 more a year’ increase, which of course is only £20/week, but that’s just the standard allowance. The housing allowance – which can cover rent, mortgage interest and service charge – has been unfrozen, so payouts can be larger (owner-occupiers can get help via support for mortgage interest payments). For example, in one London borough, for a two-bed home the max was £1,390/mth, it could now be as high as £1,550/mth.
Overall, some may be eligible for £1,500+/mth, and there’s no tax taken off. That’s getting close to the max furlough payment for employees.
I am not seeing anything for the small Limited Company trader in the 26 March 2020 announcement, at the time of writing, immediately after the annoucement. Most of you will have paid yourselves a small salary and dividends in order to pay less National Insurance. Your company may therefore be able to claim 80% of your salary, if you stop working completely, although there is a suggestion by HR lawyers that you are not classified as an employee. I rather think that the government will be punishing those who have paid themselves by paying dividends, because technically dividends are investment income and not earned income.
We therefore urge you to put in a claim for Universal Credit and or Employment Support Allowance, no matter how hard the process is. Review the aspects of help in this message and ask for a delay or help with your council tax.
A final word to the Self-employed and maybe even shareholder/directors. The strong hint is that tax and NI levels will be brought into line with employment. So….an increase in NI for 9% to 12%? A push from dividends to salary?
There is support out there if you have to ask your employees not to work during this period (furloughed), because of the virus. You can’t claim on the basis of them being off sick, although you can now claim back SSP from the government and pay from day one of sickness.
So if you furlough staff, you can reclaim 80% of the gross salary that you paid them in February from the date that you furloughed them, dated back to 1 March if that was the date it started. You need to check their contracts and if there is no mention of your right to furlough or pay them less, you will need to negotiate the change. You may decide to seek HR advice. You can of course pay them 100% of their wages and this will depend on your attitude and factoring in your finances as well as long term retention of staff, moral etc. Most people will be grateful for any income at the moment but if you can afford to pay them more, consider it at least.
At Broadwing we will help you calculate the wages and reclaim the money, once HMRC have systems in place to claim. We already have systems in place to separate this furloughed payment so that the claims can be made quickly for you.
Grants are available for most of you who have business rates. We now have more detail.
If you have business rates, we would expect you to receive a letter from your local authority inviting you to claim a grant. Simply put and with a few exceptions here are the basic criteria:
£10,000 grant – all businesses in England in receipt of Small Business Rates Relief (SBRR) and Rural Rates Relief (RRR) in the business rates system will be eligible for a payment of £10,000. You need to be eligible for relief on 11 March 2020 under the business rate Small Business Rate Relief Scheme (including those with a Rateable Value between £12,000 and £15,000 which receive tapered relief).
£25,000 grant – Under the Retail, Hospitality and Leisure Grant (RHLG) businesses in England in receipt of the Expanded Retail Discount (which covers retail, hospitality and leisure) with a rateable value of less than £51,000 will be eligible for the following cash grants per property.
Eligible businesses in these sectors with a property that has a rateable value of over £15,000 and less than £51,000 will receive a grant of £25,000. Businesses with a rateable value of £51,000 or over are not eligible for this scheme.
Hereditaments which on the 11 March 2020 had a rateable value of less than £51,000 and would have been eligible for a discount under the business rates Expanded Retail Discount Scheme had that scheme been in force for that date are eligible for the grant.
If you need any help with these applications, do not hesitate to ask.
You can access detailed information on the following website:
You will be able to apply for loans and the government will guarantee 80% of the loan if you default. However, you will still be liable to repay 100% of the amount borrowed and so it is vital for you to assess whether you can repay such a loan. The banks are not guaranteeing that they will lend of course and will apply similar criteria to lending as they always have. They will ask for business plans too to ensure that you have worked out how the loan will be repaid. They will want to ensure that you can ultimately repay the loan or overdraft applied for.
Once again, Broadwing can help you with a cashflow forecast & business plans etc.
Taken straight from the Government website:
Businesses in the retail, hospitality and leisure sectors in England will not have to pay business rates for the 2020-21 tax year. Businesses that received the retail discount in the 2019-20 tax year will be rebilled by their local authority as soon as possible.
Properties that will benefit from the relief will be those that are wholly or mainly being used:
- as shops, restaurants, cafes, drinking establishments, cinemas and live music venues,
- for assembly and leisure; or
- as hotels, guest and boarding premises and self-catering accommodation.
Nurseries registered with Ofsted will also benefit from no rates in 2020-21
Paying your taxes
VAT – Your next VAT payment will be deferred until 5 April 2021. That is for quarter ends 31 March 2020; 30 April 2020; or 31 May 2020. You must still file the returns online. This is automatic and no application is required.
Important – If you pay by direct debit you will need to contact the bank and cancel if you wish to defer.
Income Tax – Self-assessment payments due on 31 July 2020 can be paid on 31 January 2021. This only applies to the self-employed. So, if you owe money for property or dividend income this will not apply.
Other taxes – We know of no other official deferment schemes, however it is likely that the Time to Pay system will be more flexible than usual, where you can pay your taxes over a period, usually no more than 12 months. Interest is likely to still be added and you can’t take advantage of this unless you have a reason for not being able to pay.
We would like to wish you all the best, both for your business and for the health of you and your families.
Broadwing was set up with the intention of being a client first firm and with that in mind, we are here to help you through this. So, do not hesitate to contact us with any questions you may have.