Supporting you and your business through the coronavirus pandemic
(updated 26 March 2020)
Time to pay, VAT and July tax payments
- Cancel your CIS, PAYE and corporation tax payments and contact HMRC to arrange a payment plan.
Call 0800 015 9559
Monday to Friday 8am to 8pm
Saturday 8am to 4pm
If you are self employed and you have an outstanding tax liability of less than £10k you may be able to arrange to pay in instalments online at www.gov.uk/difficulties-paying-hm
- The helpline is there to help you set up an agreed time period to pay, stop any debt collection proceedings and cancelling late payment penalties and interest.
- The helpline will undoubtedly be busy, so if you cannot get through, cancel all your tax payments to protect cash flow and write directly to HMRC. We have drafted a letter overleaf for you to use.
- If you’re self-employed, income tax payments due in July 2020 under the self-assessment system will be deferred to January 2021. This has now been extended to all taxpayers not just the self-employed. The government have asked that if you can afford to make the payment please still do so.
- VAT payments have been delayed until 30 June 2020. You have until the end of the 2020/21 tax year to catch up. VAT returns should still be prepared as it is just the payment that is being deferred. If a refund is due this will be paid to you.
Cash flow & controlling costs
- Look at your latest business rates bill which should have arrived in the past couple of weeks.
- If you have been given retail discount, cancel your business rates DD. You will be given a payment holiday for a year and may qualify for a £25,000 grant.
- If you have been given small business rates relief, you may be entitled to a £10,000 grant.
- There is also a rates discount for nurseries. To check your eligibility please log on to the following:
- Ask your landlord for a rent free period for 3 month
- Be extra vigilant in chasing customers for unpaid debts
- If you have slow moving stock, better to discount it and release some cash, than having it sat on your shelves.
- Stop using subcontractors and anyone on a zero hours contract
- Talk to your lenders and ask for a repayment holiday on existing loans. If you need to extend an existing facility or take out a new one, talk to us and we can help you put these in place
- If you are self-employed you may be entitled to Universal credit. You can check online to see if you are eligible and if so how to claim. If you and your partner jointly have more than £16,000 in savings you will not be eligible.
The website is www.gov.uk/universal-credit
Business interruption loan scheme for SME’s
This scheme is now available for applications, and you need to talk to your current bank about applying for it.
You must be a viable business though and the bank will need the following:
- Copy of your latest financial accounts
- Some narrative on how you think the outbreak will impact on your business over the next 6-12 months (although much of this will be guesswork)
- Prepare a simple 12 month cash flow and profit & loss forecast to show how much you are likely to need in this difficult period (see template attached to this email)
- Completed personal assets & liabilities statement
We recommend you gather this information now, even if you do not think you need the loan immediately. When you do need to apply, you will have all the information to hand, so call us if you need assistance with this.
The government will provide lenders with a guarantee of 80% on each facility, but you may be asked to guarantee the remaining 20% (this is why they will ask for a personal assets & liabilities statement)
Up to £5m is available, with no arrangement fees or interest charged for the first 12 months.
Sick pay and laying off staff
Check your contracts of employment regarding sick pay and if you give employees more than statutory sick pay, then you should refer to your solicitor or legal service provider for their advice.
The government has confirmed that any business employing less than 250 employees can reclaim 14 days statutory sick pay per person (which is just under £200 a person) if the absence is a result of coronavirus. This payment can now be claimed from the first day of absence (ie not the fourth day under normal SSP rules), and covers absence due to actual illness, self-isolation or family isolation.
How you reclaim it is not yet known. You might be able to deduct this from your next PAYE and NIC payment, but if you’re deferring these payments then of course this won’t help. HMRC is putting a new repayment system in place, so it is likely to be several weeks before the cash comes back to you.
Job Retention Scheme
HMRC will reimburse 80% of laid off workers wage costs, up to a cap of £2,500 per month. Claims can be backdated from March 1st. An employer can decide to top this up to 100% but they do not have to by law.
HMRC will have to create a new IT software system to run the scheme. This will take until April to complete as it requires a brand-new system to reverse pay staff normally paid under PAYE rules.
This scheme is only available for employees who have been furloughed (laid off) so they must not continue to work, the ability to change the status of your employees is still subject to employment law.
On 26th March the government announced how the scheme will work in practice.
The scheme is open to all UK employers that had created and started a PAYE payroll scheme on or before 28 February 2020.
By the same token furloughed employees must have been on your PAYE payroll on 28 February, and can be on any type of contract, including:
- Full-time employees
- Part-time employees
- Employees on agency contracts
- Employees on flexible or zero-hour contracts
It is important to remember that when on furlough, an employee cannot undertake ANY work for or on behalf of the organisation.
While on furlough the employees wage will be subject to usual income tax and other deductions.
WORK OUT WHAT YOU CAN CLAIM
You will receive a grant from HMRC to cover the lower of 80% of and employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
FULL TIME AND PART TIME EMPLOYEES
For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.
EMPLOYEES WHOSE PAY VARIES
The calculation depends upon how long the employee has been working for you. Details of how to calculate this can be found in the detailed guidance (see link below)
WHAT YOU’LL NEED TO MAKE A CLAIM
Employers should discuss with their staff and make any changes to the employment contract by agreement.
If you haven’t got your own employment advisers, you can telephone Croner Taxwise on 0844 892 2807 and state that you are our client. Under the current situation we are offering this even if you have not joined our insurance scheme
To claim, you will need:
- Your ePAYE reference number
- Your bank account number and sort code
- The number of employees being furloughed
- The claim period (start and end date)
- Amount claimed (per the minimum length of furloughing of 3 weeks)
- Your contact name and phone number
It is up to you to calculate the amount you are claiming and HMRC will retain the right to retrospectively audit all aspects of your claim.
You can only submit one claim at least every 3 weeks, which is the minimum length and employee can be furloughed for. Claims can be backdated to 1 March if applicable.
Once HMRC have received your claim they will pay it via BACS payment to your UK bank account
Full detailed guidance can be found by clicking on the following link.
COVID 19 Self-employment Income Support Scheme
This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This will be based on the average profits for the last 3 tax years.
You must have submitted your 2019 Tax Return and if you haven’t you have until 23 April 2020 to do so. You must also have traded in 2019/20 and intend to continue trading in 2020/21.
You cannot apply for the scheme yet but HMRC will contact you and invite you to apply if you are eligible. Please do not contact HMRC before this as this will delay claims.
When HMRC have received your claim and confirmed that you qualify they will contact you telling you how much you will receive. The amount will be paid directly into your bank account in one instalment.
For full details please log on to www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme
For our musician clients if you are in financial difficulty you may be able to get help from the charity Help Musicians. Please click on the link below for more information.
Use existing tax rules by ….
Changing your year end
If you experience a downturn in business over the next few months, then we can change your end to a later date to reduce your next tax bill.
For example, if your company’s taxable profit was £100,000 to 31 December 2019 then you will have a corporation tax liability of £19,000 on 1 October 2020. However, if you make a loss in the first six months of 2020, it is possible for us to extend your accounting period for up to 18 months. This brings the loss forward effectively, so it can significantly reduce or wipe out your tax liability later this year.
Accelerating a tax refund
Getting your return in early, doesn’t bring forward any tax payment dates, but it does bring forward tax refunds.
If you expect your personal income to be less this year, get your income tax return in as soon as possible after 6 April 2020, for a potential refund of part of your January 2020 tax payment. Then know the exact amount due in July
If you make a sole trader or partnership tax loss to 5 April 2020, generate a tax refund by carrying the loss back to 2019
Template time to pay letter to HMRC
(use your usual HMRC payment office address)
Coronavirus financial difficulties
We understand that the government has introduced new time to pay measures to assist businesses in financial difficulties caused by coronavirus.
Over the last few weeks we have experienced a substantial downturn in business and do not have the means to pay all of our tax liabilities as they fall due.
Our tax references are:
PAYE employer no
VAT registration no
Corporation tax no
We are taking all steps possible to continue trading, which includes non-payment of taxes in the short term. We are anxious to put an agreed plan in place with you so could you please make contact with us at your convenience either at the address shown on this letter, or by calling (enter your tel no) asking specifically for (your name).