COVID-19 Considerations – What You Need To Know
COVID-19 Considerations – What You Need To Know
Self Employment
17th April 2020
Motor finance and high-cost credit
On 17 April the FCA issued draft guidance on how companies providing motor finance and ‘high-cost finance’ (for example, payday loans and pawnbroking) should treat customers. The main proposal is a three-month payment freeze, other than for high-cost credit, which would be subject to a one-month interest-free payment freeze. The FCA expects to finalise proposals by Friday 24 April 2020, which would come into force shortly afterwards.
14th April 2020
Personal loans, credit cards and overdrafts
The FCA announced temporary measures, effective from 14 April, which expect firms providing consumer finance to
- Offer a temporary payment freeze on loans and credit cards for up to three months, for consumers negatively impacted by Covid-19.
- Allow customers who are negatively impacted by Covid-19 and who already have an arranged overdraft on their main personal current account, up to £500 charged at zero interest for three months.
- Make sure that all overdraft customers are no worse off on price when compared to the prices they were charged before the recent overdraft pricing changes came into force.
- Ensure consumers using any of these temporary payment freeze measures will not have their credit file affected.
FCA consumer guidance is available here.
14th April 2020
Guidance for people who are self-employed and getting less work or no work because of coronavirus (COVID-19).
Claim a grant if you’ve lost income
If you’re getting less work or no work because of coronavirus (COVID-19), you might be able to claim a grant through the coronavirus 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 a month. It will be available for 3 months, but may be extended.
The grant will be subject to Income Tax and National Insurance contributions but does not need to be repaid.
You can make a claim for Universal Credit while you wait for the grant, but any grant received will be treated as part of your self-employment income and may affect the amount of Universal Credit you get. Any Universal Credit claims for earlier periods will not be affected.
If you receive the grant you can continue to work or take on other employment including voluntary work.
If you have other employment as a director or employee which is paid through PAYE your employer may be able to get support using the Job Retention Scheme.
Who can claim
You can claim if you’re a self-employed individual or a member of a partnership and you:
- have submitted your Self Assessment tax return for the tax year 2018 to 2019
- traded in the tax year 2019 to 2020
- are trading when you apply, or would be except for coronavirus
- intend to continue to trade in the tax year 2020 to 2021
- have lost trading profits due to coronavirus
You will need to confirm to HMRC that your business has been adversely affected by coronavirus. HMRC will as usual use a risk based approach to compliance.
Your trading profits must also be no more than £50,000 and more than half of your total income for either:
- the tax year 2018 to 2019
- the average of the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019
NOTE: If you have not submitted Self Assessment tax returns for all 3 years find out how the Government will work out your eligibility
If you have not submitted your Self Assessment tax return for the tax year 2018 to 2019, you must do this by 23 April 2020 or you will not be able to claim.
HMRC will use data on the 2018 to 2019 tax returns already submitted to identify those eligible and will review any late returns filed before the 23 April 2020 deadline in the usual way.
If you amend a submitted return after 26 March 2020 any changes will not be taken into account when working out your eligibility or amount of the grant.
If you have loans covered by the loan charge
If you’re self-employed and have received payment for work or services in the form of a loan or other form of credit covered by the loan charge, you may be able to claim the grant, however your eligibility and average trading profits will be based on either:
- the average of the tax years 2016 to 2017 and 2017 to 2018
- the tax year 2017 to 2018 if you were not self-employed in the tax year 2016 to 2017
You do not have to file your 2018 to 2019 Self Assessment tax return by 23 April 2020. You should file by the 30 September 2020.
If you have not submitted Self Assessment tax returns for all 3 years
The Government will work out your average trading profit based on continuous periods of self-employment, which will be either:
- the tax years 2017 to 2018 and 2018 to 2019
- the tax year 2018 to 2019 only, even if you were self-employed in the tax year 2016 to 2017
The grant will be 80% of your average trading profit, divided by 12 which will give a monthly amount. The Government will pay this or up to a maximum of £2,500 a month, whichever is lower.
We’ll pay the grant directly into your bank account, in one instalment.
How to claim
You cannot make a claim yet.
HMRC will aim to contact you by mid May 2020 if you’re eligible for the scheme and invite you to claim using the GOV.UK online service. If you’re unable to claim online an alternative way to claim will be available. The Government will update this page with more information soon.
This page will also be updated with the steps you can take to make it easier to claim using the GOV.UK online service.
You do not need to contact HMRC, as this will only delay the urgent work being undertaken to introduce the scheme.
You will only be able to claim using the GOV.UK online service. If you receive texts, calls or emails claiming to be from HMRC, offering financial help or a tax refund and asking you to click on a link or to give personal information, it is a scam.
After you’ve claimed
Once HMRC has received your claim and your grant is approved, we will contact you to tell you how much you’ll get and the payment details.
Other help you can get
The government is also providing the following additional help for the self-employed:
- Deferral of Self Assessment Income Tax and VAT payments
- Grants for businesses that pay little or no business rates
- Business Interruption Loan Scheme
Help for the Self-Employed
26th March 2020
Expanding the UK Government’s measures to protect people and businesses from the economic impact of coronavirus, today the Chancellor focused on self-employed individuals (including members of partnerships) whose incomes have suffered.
Called the Self-employment Income Support Scheme (SEISS), this will come as a welcome relief to those in self-employment, who comprise 15.3% of the UK’s workforce. The new scheme will cover 95% of those who are self-employed.
Under the scheme, a grant will be provided to self-employed individuals or partnerships, worth 80% of their profits up to a cap of £2,500 per month, initially for three months.
Qualifying for the scheme
The criteria for the scheme, all of which you must meet to be eligible, are:
- Be self-employed or a member of partnership
- Have lost trading/partnership trading profits due to coronavirus (COVID-19)
- We assume that “trading” includes professions; but it is not yet clear what evidence will be required that profits have in fact been affected by coronavirus
- File a tax return for 2018/19 as self-employed or a member of a trading partnership
- For eligible individuals who have not submitted their returns for 2018/19, they will have 4 weeks’ notice from 26 March (i.e. until 23 April 2020) to file their returns and therefore become eligible – otherwise you will be excluded from the scheme
- Have traded in 2019/20; be currently trading at the point of application (or would be except for coronavirus) and intend to continue to trade in the tax year 2020/21
- Have trading profits of less than £50,000 (this appears to be a cliff-edge: £49,999 makes you eligible but £50,000 doesn’t) and derive more than half of your total income from self-employment.
This can be with reference to either of the following conditions:
- Your trading profits and total income in 2018/19
- Your average trading profits and total income across up to the three years between 2016/17, 2017/18 and 2018/19.
How much you’ll get
You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):
2016 to 2017
2017 to 2018
2018 to 2019
To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable), and use this to calculate a monthly amount.
It will be up to a maximum of £2,500 per month for 3 months.
They’ll pay the grant directly into your bank account, in one instalment.
Accessing the scheme
HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational. HMRC will then pay the grant directly to eligible claimants’ bank account. Therefore people have been asked not to contact HMRC about the scheme now.
It’s intended that the machinery will be set up in time to allow claims to be made from 1 June 2020, with payments starting to be paid from the beginning of June.
In the meantime, self-employed people remain eligible for other government support including business continuity loans and more generous Universal Credit. Access this information below:
Support for businesses that pay little or no business rates:
Universal Credit:
https://www.gov.uk/universal-credit
Business Interruption Loan Scheme:
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Business Support
7th April 2020
COVID-19 Business Interruption Loan Scheme
Changes have been announced to the COVID-19 Business Interruption Loan Scheme which will provide a sense of relief to some, following criticism that businesses have struggled to access loans.
The Government will provide support for SME’s with annual turnover below £45 million affected by the COVID-19 pandemic access to loans, overdrafts, invoice finance and asset finance of up to £5 million for up to six years. It has now been extended so more small businesses can benefit, and not just those unable to secure regular commercial financing.
The Chancellor has also announced a new scheme to ‘bolster support for larger firms not currently eligible for loans’.
The new Coronavirus Large Business Interruption Loan Scheme will provide a guarantee of 80% to enable banks to make loans of up to £25 million to firms with an annual turnover of between £45 million and £500 million. Also mentioned, lenders have been banned by the government from requesting personal guarantees on loans under £250,000. The government will continue to cover the first twelve months of interest and fees.
For more info:
Cash grants for retail, hospitality and leisure businesses
April 2020
The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
Businesses in these sectors with a property that has a rateable value of up to £15,000 may be eligible for a grant of £10,000.
Businesses in these sectors with a property that has a rateable value of over £15,000 and less than £51,000 may be eligible for a grant of £25,000.
Eligibility
You are eligible for the grant if:
- Your business is based in England
- Your business is in the retail, hospitality or leisure sector
- Your business has a rateable value of under £51,000
Properties that will benefit from the relief will be occupied properties that are wholly or mainly being used:
- As shops, restaurants, cafes, drinking establishments, cinemas and live music venues
- for assembly and leisure
- As hotels, guest and boarding premises and self-catering accommodation
How to access the scheme
Your local authority will write to you if you are eligible for this grant.
Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.
https://www.gov.uk/find-local-council
Business rates holiday for retail, hospitality and leisure businesses
April 2020
The Government will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.
Eligibility
You are eligible for the business rates holiday if:
- Your business is based in England
- Your business is in the retail, hospitality and/or leisure sector
Properties that will benefit from the relief will be occupied properties that are wholly or mainly being used:
- as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
- for assembly and leisure
- for hospitality, as hotels, guest & boarding premises or self-catering accommodation
More information on eligibility is set out in the expanded retail discount guidance https://www.gov.uk/government/publications/business-rates-retail-discount-guidance
How to access the scheme
There is no action for you. However, local authorities may have to reissue your bill to provide this support. They will do this as soon as possible.
You can estimate the business rate charge using the business rates calculator. https://www.gov.uk/calculate-your-business-rates
Support for businesses who are paying sick pay to employees
We will bring forward legislation to allow small and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:
- This refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
- Employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020
- Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
- Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 onlineand those who live with someone that has symptoms can get a note from the NHS website:
Eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force. The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible
Eligibility
- You are eligible for the scheme if:
- Your business is UK based
- Your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020
How to access the scheme
A rebate scheme is being developed. Further details will be provided in due course once the legalisation has passed. (Update to follow)
Job Retention Scheme
26th March 2020
The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020.
Employers can use a portal to claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance Contributions (NICs) and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period.
The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.
Qualifying employees:
Furloughed employees must have been on your PAYE payroll on 28 February 2020, 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
The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
To be eligible for the subsidy, when on furlough, an employee cannot undertake work for or on behalf of the organisation. This includes providing services or generating revenue but training is permitted, as is volunteering outside work.
To be eligible for the subsidy, employers should write to their employee confirming that they have been furloughed and keep a record of this communication
There are specific provisions dealing with employees on maternity leave, contractual adoption pay, paternity pay or shared parental pay. Let us know if you need further details.
Work out what you can claim
If you’re an employer, you can claim for wage costs through this scheme.
You will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer NICs and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
At a minimum, you must pay your employee the lower of 80% of their regular wage or £2,500 per month. You can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.
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, commissions and bonuses should not be included.
Employees whose pay varies
If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:
- The same month’s earning from the previous year
- Average monthly earnings from the 2019/20 tax year
If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.
Once it has been established how much of an employee’s salary can be claimed for, the employer or its agent must then work out the amount of Employer NICs and minimum automatic enrolment employer pension contributions can also be claimed.
Directors
In the absence of specific guidance to the contrary, we believe directors would also be eligible for the scheme as long as they are properly furloughed and do not for example undertake any revenue generating function during their period of furlough. We await further guidance from HMRC on how directors may avail themselves of the scheme.
National Living Wage/National Minimum Wage
Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working.
This means that furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.
However, if workers are required for example to complete training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.
What employers will need to make a claim
To claim, you will need:
- Your ePAYE reference number
- 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 bank account number and sort code
- Your contact name
- Your phone number
The employer must quantify the claim, subject to HMRC’s normal right to audit all aspects of the claim.
Claiming
The employer can only submit one claim at least every three weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until 1 March if applicable.
What to do after the claim has been submitted
Once HMRC have received your claim and processed it, they will pay it via BACS payment to a UK bank account.
You should make your claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll.
You must pay the employee all the grant you receive for their gross pay; no fees can be charged from the money that is granted. You can choose to top up the employee’s salary, but you do not have to.
The end of the scheme
When the government ends the scheme, the employer must make a decision, depending on their circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy).
Income tax and Employee National Insurance
Wages of furloughed employees are subject to income tax and National Insurance as usual. Employees must also pay auto-enrolment contributions on qualifying earnings, unless they have chosen to opt out or to cease saving into a workplace pension scheme.
Employers will be liable to pay Employer NICs on wages paid, as well as automatic enrolment contributions on qualifying earnings unless an employee has opted out or has ceased saving into a workplace pension scheme.
Mortgage & Equity Release
April 2020
Private and social landlords will not be able to start proceedings to evict tenants for the period to 30 September 2020.
Housing benefit
Housing Benefit and the housing element of UC will be increased so that the Local Housing Allowance will cover at least 30% of market rents.
March 2020
Coronavirus Mortgage Payment Holidays
The mortgage payment holiday will provide flexibility in repaying your mortgage by allowing you to stop or reduce your monthly payments for up to three months.
This could provide much-needed help but it won’t be suitable for everyone.
Applying for a mortgage payment holiday
- Contact your lender and tell them you are experiencing payment difficulties due to coronavirus.
- There will be a fast track approval process in place and you won’t need to provide evidence or have an affordability test. So, you should get a quick decision.
- Any unpaid interest will probably still need to be paid back but you won’t have to worry about any additional fees or charges.
Individual credit ratings should not be affected but if you are worried you should speak with your lender.
What your lender will discuss with you?
Your lender will discuss any sums covered by a payment holiday, increases in your monthly repayments and any increase in the total amount payable under your mortgage contract once the payment holiday has ended.
They may discuss alternative ways of how you can repay if this is more suitable, but the main options your lender may consider are outlined below:
- Spreading your deferred payments over the outstanding term of your mortgage
This means you will see an increase in your monthly mortgage repayments once your mortgage payment holiday period is over. The shorter the term left on your mortgage, the larger the increase in your monthly payments, once the mortgage payment holiday is over.
- Increasing the length of your mortgage term
Extending the length of your mortgage means you might see a smaller increase in your monthly repayments. But you will be paying your mortgage back over a longer period which means you will be paying more in interest over the term of your mortgage.
- Making interest or capital only payments
Just making interest only or capital only repayments during your mortgage holiday might be an option for some people. This will reduce any increases in your monthly repayments compared to some other options once your mortgage holiday period is over, but you will still need to pay back any shortfall in your normal monthly payments.
If you are already behind with mortgage payments
Being currently behind with your mortgage payments does not exclude you from applying for a mortgage payment holiday if this is appropriate for your circumstances.
If you’re worried about repossession you should not be at risk of losing your home during this period as mortgage repossession proceedings have been temporarily suspended but do speak with your lender.
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