Anne Cowley, director, Baines Jewitt Chartered Accountants provides an update on the latest actions taken by the Government in relation to Coronavirus business support packages and tax-related issues.
Chancellor unveils changes to furlough scheme
The Chancellor, Rishi Sunak, has unveiled changes to the Coronavirus Job Retention Scheme (CJRS).
From July employers will be being able to bring back previously-furloughed workers on a part-time basis, with the value of the grant to employers then tapering downwards from August until the close of the scheme in October.
The CJRS will also close to new entrants from 30 June, meaning the last date an employee can be furloughed for the first time will be 10 June 2020.
Self-Employment Income Support Scheme (SEISS) extended
The Self-Employment Income Support Scheme (SEISS) has been extended, with the announcement of a second and final grant to support the income of self-employed individuals during the Coronavirus outbreak.
The first and current round of grants under the scheme allows self-employed individuals to claim a taxable grant worth 80 per cent of three months’ average monthly trading profits, capped at a total of £7,500 and paid in a single instalment.
Applications for this round of grants will close on 13 July 2020. However, the Chancellor has now announced that self-employed individuals will be able to claim a second grant in August. This will be worth 70 per cent of three months’ average trading profits and will be capped at £6,570 in total, also paid in a single instalment. Individuals do not need to have claimed the first grant to be able to claim the second.
Coronavirus Future Fund open to applications
The Future Fund, which offers convertible loans of between £125,000 and £5 million to innovative companies facing financial difficulties as a result of the COVID-19 pandemic, has opened.
The fund is designed to support UK-based companies that have acquired at least equal match funding from private investors. Aimed specifically at businesses that typically rely on equity investment, the fund is a lifeline for firms that cannot access other forms of Government business support because they are either pre-revenue or pre-profit.
Tax treatment of expenses and benefits during Covid-19
The Government has updated its guidance on taxable expenses and benefits when they are paid to employees during the Coronavirus crisis and how employers should report them to HM Revenue & Customs (HMRC). The new guidance relates to income tax treatment only and not National Insurance Contributions, which may vary depending on the individual benefit or expense.
These changes may affect how businesses provide and report the following benefits and expenses: living accommodation; company cars; Employee Car Ownership Schemes (ECOS); loans; meals; salary sacrifice; transport and volunteering.
Maximum Government-backed loan amount for larger businesses increased to £200m
There is an increase in the maximum amount that larger businesses can borrow under the Coronavirus Large Business Interruption Loan Scheme (CLBILS) from £50m to £200m.
CLBILS loans are offered on normal commercial terms, but are backed by a Government guarantee worth 80 per cent of the amount borrowed. They can be accessed through the 12 lenders accredited for the scheme by the British Business Bank. The increase came into effect from Tuesday 26 May 2020 and means that larger businesses can borrow up to 25 per cent of turnover, subject to a maximum of £200m.
At the same time, the Government has introduced restrictions on dividends, share buybacks and executive pay for firms benefiting from CLBILS loans of more than £50 million. The restrictions will also apply to large businesses accessing the Bank of England’s Covid Corporate Financing Facility (CCFF).
Temporary tax freeze on home office expenditure announced
A temporary tax and National Insurance Contribution (NIC) exemption has been introduced to ensure home office equipment purchased by employees, where reimbursed by the employer, does not attract tax or NICs. The temporary exemption will affect expenses from 16 March 2020 until the end of the 2020/21 tax year. The move should ensure employees are not financially penalised as a result of changes in working arrangements during the pandemic.
Employers can also reimburse certain costs tax-free where there is a ‘homeworking arrangement’ between an employer and an employee. As of 6 April 2020, an employer can pay employees up to £6 a week (£26 a month) to cover additional costs if they have to work from home.
Coronavirus Statutory Sick Pay Rebate Scheme opens for claims
The Coronavirus Statutory Sick Pay Rebate Scheme (CSSPRS) is now open for claims. The scheme enables employers with up to 250 employees to claim the cost of Statutory Sick Pay (SSP) related to Coronavirus, as long as they had a PAYE payroll scheme created and started on or before 28 February 2020.
The scheme applies to periods of sickness from 13 March 2020 in respect of employees with Coronavirus or to those who have been self-isolating because someone they live with has symptoms. For employees who have been shielding, the scheme applies from 16 April 2020.
Notifying an option to tax (VAT) on land and buildings during the Coronavirus pandemic
HMRC has made temporary changes to the time limit and rules for notifying an option to tax (charge VAT on) land and buildings. Normally, when notifying HMRC of a decision ‘to opt’ to tax land and buildings, you have 30 days to contact the tax authority. However, due to social distancing requirements, HMRC has extended the time limit to 90 days from the date the decision to opt was made.
This extension applies to decisions made between 15 February and 31 May 2020.
Money laundering supervision payment deferrals and deregistration announced
Businesses that require money laundering supervision from HMRC can receive a six-month payment deferral or deregistration, where an annual fee is due between 1 May and 30 September 2020.
HMRC is the money laundering supervisory authority for:
accountancy service providers not supervised by a professional body
• art market participants
• bill payment service providers not supervised by the Financial Conduct Authority (FCA)
• estate agency businesses
• high value dealers
• money service businesses not supervised by the FCA
• telecommunications, digital and IT payment service providers not supervised by the FCA
• trust or company service providers not supervised by the FCA or a professional body
Businesses in these sectors must pay an annual renewal fee of £300 in respect of each premises covered. However, on receipt of the reminder notification from HMRC, they can now choose to pay in the normal way or at any time in the following six months.
For more detail about any of these business support packages and tax-related issues, talk to your accountant or contact HMRC.