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The Coronavirus Further Update: The Self Employed Scheme

Eligibility

  1. You need to be self-employed either as an individual or a member of a partnership.
  2. You have been trading in the 2019/20 tax year.
  3. You are trading when you apply, or you would be but for the Coronavirus.
  4. You have lost trading/partnership income due to the COVID-19.
  5. You either must have already submitted your 2018/19 Tax Return or do so by 23rd April 2020 to be eligible. In the latter case, HMRC will be risk assessing those ‘late’ returns.
  6. Your self-employed income must represent more than 50% of their total taxable income.
  7. Your trading profit must be less than £50,000 based upon the average of your last 3 years of trading i.e. 2016/17, 2017/18 and 2018/19. If you started trading between 2016 – 2019 then HMRC will only use those years for which a SA Return has been filed.

Important to Note 

  1. If you started trading during the 2019/20 tax year you won’t, at present, be eligible for the scheme. Universal credit and/or the Coronavirus Business Interruption Loan Scheme might be the route to down. Pressure is already being put on the Government in this respect to relax the scheme.
  2. If your average profits are £50,000 or more, at present, you won’t be eligible for the scheme. Again, Universal credit and/or the Coronavirus Business Interruption Loan Scheme might be the route to go down. Pressure is already being put on the Government in this respect to relax the scheme.
  3. You can still benefit from the scheme if you are still trading but your trading income has been affected by COVID-19.
  4. This scheme is not eligible for directors in Personal Services companies.

What is the entitlement?

  1. The taxable grant will be 80% of the average profit figure and then divided by 12 to break down into the monthly payments. The scheme is initially set up to run for three months.
  2. The maximum monthly pay out will be £2,500.
  3. HMRC will pay it directly into your bank account.

How to apply

  1. You cannot apply for the scheme yet.
  2. HMRC will be reviewing the 2018/19 tax year submissions and presumably earlier years as well to see who might be eligible.
  3. HMRC will then contact the taxpayer direct after having carried out the review and will ask them to access the scheme via Gov.UK website. 
  4. Please be warned that scams from people who may use this opportunity to send emails, texts or phone calls to ask you to provide bank and credit card details to get your grant. It will only be accessibility through the Gov.Uk portal.
  5. The payments are likely to only come through in early June. This could put pressure on some clients. The Government are already under pressure to move the payment forward.

Companies Filing Date Extended

If the accounts are likely to be late because of COVID-19 and the deadline for filing the company accounts has not yet passed, you can apply for an automatic and immediate 3 month extension to filing the accounts. The link is shown in full below.

https://beta.companieshouse.gov.uk/extensions?_ga=2.192117290.1413427800.1585147224-1416959183.1577100390

Companies that have already extended their filing deadline or shortened their accounting reference period may be ineligible for an extension.

VAT and Income Tax Deferral

I know I have already mentioned that VAT payments due before 30th June 2020 will not now need to be made until the end of the tax year and self-assessment payments on account will not need to be paid until 31st January 2021, however there are two new things to mention:

  1. If you have set up a direct debit to meet either or both of these liabilities please cancel the direct debit if you have not already done so.  
  2. The 31st July payment was originally thought to relate only to the self-employed. It now relates to anybody with a 31st July payment if they choose to do so.  

Coronavirus Job Related Scheme Further update

  1. If someone was made redundant after 28th February, the ex-employer can re-employ them and then furlough to cover the 80% monthly earnings.
  2. If someone has more than one employer and can continue to work for another, your client employer can furlough that employee if it is permitted within their contract to have more than one job.  
  3. Official HMRC update:

Those who pay themselves a salary and dividends through their own company are not covered by the scheme but will be covered for their salary by the Coronavirus Job Retention Scheme if they are operating PAYE schemes.

Produced by Shaz Nawaz 30th March 2020

Covid-19 business information pack

Board Member and Chartered Accountant Shaz Nawaz has put together a helpful information pack for businesses affected by Covid-19.

What’s in the pack

  • Businesses: what you need to know.
  • Help for companies affected by Coronavirus (Includes SSP, Grants and Funding)
  • Help for individuals affected by Coronavirus.
  • Businesses: things to think about.
  • Cash Flow, Cash management.
  • Looking after yourself and your team.

Produced by Shaz Nawaz 24th March 2020

Covid-19 Information For Business

These are very uncertain times for our profession with live events being cancelled and, of course, little new being booked. It’s been great to see the community really come together and demonstrate the strength of the PSA over recent days. Despite that support, we recognise that you may be facing financial challenges in the coming months. 

The Chancellor of the Exchequer announced a series of measures last week to try to relieve the strain on businesses. We asked Board Member and Chartered Accountant Shaz Nawaz to give us some insight into how to interpret the Chancellor’s statement and some advice on the steps PSA members may be able to take. 

Please see Shaz’s analysis below. We hope this is useful. Please do participate in the discussions on our various Facebook groups and reach out to fellow members both for support and to offer support yourself. 

Together we stand a great chance of getting through this. 

The Professional Speaking Association.

Coronavirus Present Understanding
VAT
They have given our specialist details of the deferment procedure, the situation is very fluid and so could change. If you are having financial difficulties due to the coronavirus then you can apply for a deferment of VAT. Currently they are not checking the validity of any information received.
The HMRC telephone number is 0300 200 3853. You will need the following information to hand.

1 VAT number
2 Date of VAT registration
3 Details of the last VAT returns box 5 figure.
4 Name address and post code of the business.

You will then need to explain that your income has been severely depleted/ceased due to the Coronavirus and that you will not be able to pay your VAT debt/liability. Ask for a deferment of 3 months and when this is agreed you will need to cancel your DD if one is set up. HMRC will not chase the debt if this action has been completed but if no action has been taken then they will proceed as normal. HMRC cannot agree a time to pay arrangement if a VAT Return has not been submitted. So, you’ll need to submit the Return before you arrange deferral of the liability.

The specialist unit hasn’t yet been set up yet so any calls on the specialist number are just going through to the normal teams.  They are very short staffed.

Tax
All businesses and self-employed people in financial distress and with outstanding tax liabilities, may be eligible to receive support from HMRC through the Time To Pay arrangement. This will be viewed on a case by case basis. HMRC’s dedicated helpline number is 0800 0159 559.
Other tax options to consider maybe now or if this crisis continues is:

  1. De-register for VAT
  2. Make a claim to reduce the client’s payments on account.
  3. If you do not have a 31st March/5 April yearend look to see if it will help with your cash flow by changing the year end and bringing forward overlap relief.
  4. For the self-employed is there a loss situation? Can this loss be utilised by setting off against other income in the year or can it be carried back up to 3 years and trigger off a refund?
  5. Are you comfortable that you have exhausted areas such as R&D/patent box relief and capital allowances claims?  

IR35 Private Sector
The Government have announced that they are now delaying the rolling out of the new private sector IR35 regime until 1st April 2021.
This could release those large companies who have not yet or are in the throes of issuing Status Determinations from having to do so.
Assuming there are contracts still to be fulfilled or entered into, it may enable you, as a PSC, to continue to run these contracts through your existing vehicle. Of course, in theory, the existing IR35 rules could still catch you out. It may cause some clients to delay going into umbrella companies, if that was the option you were considering.

Sick Pay
Those employees who follow the Government advice on self-isolating and have to stay at home and cannot work as a result, will be eligible for Statutory Sick Pay (SSP) from day 1 even if they are themselves sick.
Anyone not eligible to receive sick pay, including those earning less than the average of £118 per week, some working in the gig economy, or self-employed, the Government state they may be able to claim Universal credit and/or contributory Employment and Support Allowance. If someone needs money urgently due to the COVID-19 crisis they can apply for an advance.
SME businesses (fewer than 250 employees) will be refunded up to 2 weeks SSP for eligible employees who have been off work due to COVID-19. The Government will be working with employers to set up a suitable repayment mechanism.

Business rates
There is a 12 month business rate retail holiday for retail, hospitality and leisure businesses for the 2020/21 tax year in England. A £25,000 grant will be provided these businesses operating from small premises with a rateable value of between £15,000 and £51,000. There will be additional funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR) by way of a grant of £10,000.
In Scotland the present situation is that there is 75% rates reliefs for retail, hospitality and leisure businesses with a rateable value of £61,000 or less plus a fixed rates relief of up to £5,000 for all pubs with a rateable value of £100,000 or less.
Businesses in Northern Ireland will not have to pay rates for the next 3 months and household rate bills will be deferred from April until June.
In Wales, retail, leisure and hospitality businesses with a rateable value of £51,000 or less will receive 100% non-domestic relief and pubs with a rateable value of between £51,000 and £10,000 will receive a £5,000 reduction in their bill. 

Business insurance
Businesses that have cover for both pandemics and government ordered closures should now be covered, on the grounds that the government and the insurance industry have confirmed the advice given on 17th March would make the claim valid. Businesses should check to see if their insurance policy covers this as many will not.

The Coronavirus Business Interruption Loan Scheme
This will be launched next week by the British Business Bank to support businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan to give lenders the confidence to continue to provide finance for SMEs. The government will not charge businesses or banks for this guarantee. Businesses can access the first 6 months of this finance interest free.

Mortgage holiday
Those affected by COVID-19 will be able to have a 3 month mortgage holiday. Lenders should be approached on this matter if the client is affected.

Further announcements
 Further help for the self-employed and protection for those tenants in private rented accommodation may follow in due course.

The Chancellor has announced a series of further financial packages to help business and individuals.

They are as follows:

1. A Coronavirus Job Retention Scheme – All employers will be eligible for the scheme. Employers will be able to contact HMRC for a grant to cover 80% of the wages of retained workers who are furloughed (granted leave of absence from work) due to the coronavirus and kept on the payroll rather than laid off.  This is initially open for 3 months but can be extended if needed. It will be back dated to 1st March. HMRC are putting this in place now and hope to make the first set of grants no later than the end of April.
2. The Coronavirus Business Interruption Loan Scheme will now be interest free for 12 months as opposed to the original 6 months. These loans should be made available from Monday 23rd March.

3. The next VAT quarter payment will be deferred. No business will pay VAT from now until end of June and you will have until the end of the financial year to repay those bills.

4. The Universal credit standard allowance for the next 12 months will increase by a further £1,000 a year. He is increasing the working tax credit basic element by the same amount. 

5. The Chancellor is strengthening the safety net for the self-employed too by suspending the minimum income floor for everyone affected by the economic impact of the coronavirus. That means every S/E person can now access in full, Universal credit at a rate equivalent to SSP for employees.

6. The next SA tax payments will be deferred until January 2021.

7. As well as a 3 months mortgage payment holiday, the Chancellor, by increasing the generosity of housing benefit and Universal credit, Local Housing allowance will cover at least 30% of the market rent.

Shaz Nawaz 23rd March 2020

Moving Voices – Jeremy Nicholas talks to Emma Sutton about Speaker One Sheets

Do you have a Speaker One Sheet? That’s all your information, talk titles, profile picture, contact details etc all on one handy sheet. Emma Sutton has been investigating what makes a good One Sheet. She’s done loads of research on the subject and I spoke to her about her findings.

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Emma Sutton is the Queen of Diamonds. Shes uses her unique Diamond to help business professionals to identify, polish and express their own Diamonds with simple messages that are clear, powerful and memorable.

Moving Voices – Paul Sloane – lateral thinking expert

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Do you know the answer to this puzzle?
A man took off his shirt to go to bed and hundreds of people lost their jobs. Why?

Paul Sloane is a world renowned expert on lateral thinking.  He’s written fifteen books on the subject as well as five more on innovation. He travels across the world keynoting and running workshops to help leaders be more innovative.

In this podcast you will find the answer to some intriguing puzzles and hear Moving Voices presenter Jeremy Nicholas try to solve them live, with Paul facilitating by answering questions with a yes or no.

Listen to the show for the answer to the puzzle above.