The government has unveiled an unprecedented support package to help businesses through the COVID-19 crisis.
We have summarised below the help that is available to contractors operating through their own personal service companies. Where the information is available, we also confirm how you can access this help. We will keep this page updated as the government announces further information.
Refund of Statutory Sick Pay (SSP)
In circumstances where an employee is absent from work due to coronavirus or have to self-isolate in line with government guidance, Statutory Sick Pay will be payable from day one of absence rather than day four. SSP is now £95.85 per week.
SSP is ordinarily a cost for the employer however the government has confirmed that it will repay up to two weeks SSP for each employee that takes time off due to coronavirus. You can find more information on the circumstances for which you will be able to reclaim SSP here.
Can I claim this?
If you are an employee of your personal service company and you pay yourself a salary of at least £118 per week, then it is likely you will be able to reclaim the costs of two weeks’ SSP for yourself and any other employees that earn more than £118 per week.
How do I claim this?
The online portal to facilitate these claims opened on 26th May 2020 you can find out more about reclaiming SSP relating to coronavirus here.
What if I don’t qualify for SSP?
If you are not an employee of the business, or you pay yourself a salary below £118 per week, you will be able to claim Employment Support Allowance or Universal Credit. This is claimed directly from the government and further information is available here.
Deferral of VAT payments
From 20th March to 30th June, you were not required to make payment of your VAT return, although it needed to be submitted to HMRC as usual. This means that for the quarters ending 29/02/2020, 31/03/2020 and 30/04/2020 no VAT payments needed to be made. Initially, any deferred VAT needed to be paid in full by 31st March 2021, however due to the ongoing impact of coronavirus, the Chancellor announced that businesses that deferred their VAT will now have the option to pay in smaller installments over 12 months – the final balance being paid in full by March 2022. You will need to opt into this scheme. If you can afford to pay your deferred VAT by 31st March 2021, you should consider doing so.
How can I claim this?
You can opt to pay in installments to spread the deferred VAT over 12 months. We will update this page when we have information on how to do this.
The Coronavirus Job Retention Scheme (CJRS)
The government announced the Coronavirus Job Retention Scheme to help businesses to continue paying employees that otherwise may have been laid off. Under this scheme, businesses can access grants of up to 80% of their employees’ wages up to a total of £2,500 per month per furloughed employee.
Whilst this grant is taxable in that it will be treated as income in your accounts, the wages will be treated as an expense in your accounts and therefore there will be no corporation tax charge.
In order to access this scheme, businesses need to designate their workers as ‘furloughed employees’. A furloughed employee is an employee that remains on the payroll but is not working due to the coronavirus outbreak. From 1st July the government introduced flexible furloughing, which allows part time furlough depending upon your workloads. This could see you or your employees return to work a few days a week and continue to be furloughed for the remainder of the week, this could be useful for contractors who may be offered a tapered return to the office.
For the time furloughed, you cannot do any work that makes money or provides services to the business. Directors of personal service companies can be furloughed and continue to complete their statutory filing obligations.
The scheme has been subject to many changes and variations and on 17th December the scheme was once again extended. The CJRS will now end on 30th April 2021. The scheme from 1st November 2020 to 30th April 2021 will operate in largely the same way as it did in August 2020.
To make a claim under the extended CJRS you, or the employee you wish to make a claim for, must have been on your company’s PAYE payroll on 30 October 2020. You must have made at least one PAYE Real Time Information (RTI) submission to HMRC for the person you wish to make a claim for between the 20 March 2020 and 30 October 2020.
The grant available will remain at 80% of the wage costs of the furloughed employee or director up to a maximum of £2,500 per month. The business will need to bear the cost of any Employer’s NI and auto-enrolment pension costs, if applicable.
It is important to note that this scheme will only cover your salary. If you pay yourself dividends this will not be included in the calculation of the grant.
How do I claim this?
If you wish to make the claim yourself, you will need a PAYE online account and the following information:
- The number of employees being furloughed
- The dates employees have been furloughed to and from
- The name and National Insurance Number of each furloughed employee
- Your employer PAYE scheme reference number
- Your Corporation Tax Unique Taxpayer Reference
- Your UK business bank account details
- Your organisation’s registered name
- Your organisation’s address
You will also need to calculate the amount of the claim yourself and you should keep a record of how this was calculated.
You will receive payment into your business bank account once HMRC has verified your claim. This should be 6 working days after submitting your application.
You can find more information on how to make the claim yourself in this step by step guide.
There are now shorter deadlines for making a claim and it is important that you file your claim before the deadline. All claims for periods from 1 July 2020 to 31 October 2020 must be submitted no later than 30 November 2020.
Claims from 1 November 2020 must be submitted by 11.59pm 14 calendar days after the month you’re claiming for ends. If this time falls on the weekend, then claims should be submitted on the next working day.
Claim for furlough days in
Claim must be submitted by
14 December 2020
14 January 2021
15 February 2021
15 March 2021
14 April 2021
14 May 2021
Your company name and details of any claim will be published
HMRC will be publishing the company name, company registration number and an indication of the value of the claim within a banded range for all businesses that have made a claim under the CJRS from December 2020 onwards, however these details will not be published until February 2021. If you believe that the publication of this information would result in a serious risk of violence or intimidation, you can request that HMRC do not publish this. Further details on how to do this will be released shortly.
Claims made from 1st December will also be visible in the Personal Tax Account of any employees/directors for which a claim has been made.
You cannot claim for any days on or after 1 December 2020 during which the furloughed employee was serving a contractual or statutory notice period for the employer (this includes people serving notice of retirement or resignation). If you make an employee redundant, you should base statutory redundancy and statutory notice pay on their normal wage rather than the reduced furlough wage.
Coronavirus Business Interruption Loan Scheme (CBILS)
The Coronavirus Business Interruption Loan Scheme (CBILS) is being implemented to encourage finance providers to continue lending to small and medium sized businesses amidst the crisis. The government will provide lenders with a guarantee of 80% on each loan and will support loans of up to £5 million. The government will pay interest and any fees for the first 12 months.
Can I claim this?
- All UK business’ with turnover of less than £45 million per year
- Further eligibility criteria can be found here
- The application deadline has been extended to 31st January March 2021
How can I claim this?
All the major banks will be able to offer the scheme so you should speak to your existing bank as soon as possible. Further details of the scheme and a list of lenders is available here.
Bounce Back Loan Scheme (BBLS)
The Bounce Back Loan Scheme (BBLS) is designed to help small and medium sized businesses to access finance. The scheme gives the lender a 100% government-backed guarantee and lenders are not allowed to request personal guarantees. This support from the government should mean lenders are more willing to offer help after growing pressure from small businesses about the difficulty in accessing finance.
An accredited lender can provide a loan from £2,000 up to 25% of a business’ turnover over a maximum term of 6 years. The maximum loan amount is £50,000.
The government will pay the first year’s interest payments and there are no repayments due from the customer for the first year of the loan. The interest rate is fixed at 2.5% for the term of the loan and there will be no early repayment penalties charged.
The loan is open for applications until 31st March 2021 and if you already have a Bounce Back Loan but borrowed less than you were entitled to, from 10th November, you can top up your existing loan to your maximum amount. You can find more information about how to access the scheme and a list of accredited lenders here.
Can I claim this?
To be eligible to apply for this loan you must:
- Be a UK business established before 1st March 2020
- Have been adversely affected by coronavirus
You cannot apply if you are already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS), however you can transfer your balance from the CBILS to the Bounce Back Loan Scheme if you wish.
How can I claim this?
This scheme is provided through a network of accredited lenders and you will need to approach them directly online to apply for the loan. You can find the full list of accredited lenders here.
Deferral of Self-Assessment payments
The government announced that any self-assessment payments on account previously due to be paid on 31st July 2020, will be deferred until 31st January 2021.
A further announcement in October confirmed that taxpayers unable to pay their self-assessment tax liability, including any deferred payments on account, on 31st January 2021 can pay in instalments by entering into a ‘Time to Pay’ arrangement with HMRC.
You must still file your self-assessment tax return before the deadline, and you will need to wait at least 48 hours after filing the return before you can set up your time to pay arrangement.
As interest is payable on Time to Pay arrangements, we suggested paying your tax liability in full by 31st January if you can afford to do so.
Can I claim this?
If you are struggling to pay your self-assessment tax liability due on 31st January 2021, including any deferred payment on account, you can enter into a Time to Pay arrangement with HMRC.
How do I claim this?
You must still submit your Self-Assessment Tax Return by 31st January 2021.
Once you have done this, you will need to wait 48 hours before you can apply. If the total amount you owe is less than £30,000, you can apply online using your government gateway account. If the amount you owe is more than £30,000 you will need to call the Self-Assessment Payment Helpline on 0300 200 3822.
Extension to Companies House filing deadline
Businesses impacted by coronavirus can apply for an extension to their accounts filing deadline of up to three months. You will still need to apply for this. However, Companies House has confirmed that those citing issues around COVID-19 will be automatically and immediately granted an extension.
Applications can be made through a fast-tracked online system which will take just 15 minutes to complete. Further information on applying for an extension can be found here.
Time to Pay helpline
A helpline has also been set up to help those who are unable to pay their tax bills to discuss Time to Pay support. If you believe you will be unable to pay a tax liability due to COVID-19 you can contact HMRC on 0800 0159 559.
Self-employed Income Support Scheme (SEISS)
The Self-Employment Income Support Scheme (SEISS) was introduced to support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19).
This scheme allows the self-employed to apply for grant of 80% of their average profits up to a maximum of £7,500 covering three months’ worth of profits. To calculate your average income, HMRC will look at your last three tax returns. If you have not traded for three years HMRC, will take the average of the tax returns you have submitted.
To be eligible for the scheme you must have taxable profits of less than £50,000, make the majority of your income from self-employment and have filed a 2018/19 tax return.
On 5th November 2020, the Chancellor announced a further Self-Employment Income Support Scheme grant extension in the form of 2 further grants, each available for 3 month periods covering November 2020 to January 2021 and February 2021 to April 2021.
Self-employed individuals can access the extended scheme if they were eligible for the SEISS first and second grant (although they do not need to have claimed) and they intend to continue to trade.
It is important to note that this is a taxable grant and is effectively treated as income. You must make provision for the tax and National Insurance payments on this grant.
The government has been clear that this scheme will not be open to those workers operating through their own limited company. Instead, you will need to consider if you are eligible for a grant under the Coronavirus Job Retention Scheme.
Here to help
If you would like to discuss the above further, please get in contact with your accountant who will be happy to offer support. Please be aware that due to the current circumstances your accountant will be working from home. Please contact them by email in the first instance and they can arrange a time to call you.