SEISS Grant #4 won’t be confirmed until Budget Day 3 March 2021

Money Saving Expert, Martin Lewis has announced that he’s been told by The Treasury that details of the 4th Covid Self Employed Income Support Scheme grant will be announced on Budget Day 3 March 2021. This is expected to cover the three months of February, March and April. Until then, no one knows what eligibility criteria will be applied. It is widely hoped that it will be based on more recent information, such as the 19/20 tax returns, to finally help newly self employed people (some of the 3 million excluded from the first 3 SEISS payments) who typically started their businesses in 2019 (or even late 2018) and have been excluded either due to the 50:50 rule or because they had low (or no profit) due to start up costs. As I say, no one know whether there is hope for some of those excluded, nor even what years the payments will be based on, and unfortunately, it’s a long wait to find out for those struggling.

New Lockdown 5/1/21

The new lockdown means many small businesses and self employed will have to close again or work from home.

It’s already been announced that the furlough scheme for funding employees who are fully or partly furloughed will continue until April 2021. The furlough claims are up to 80% of normal wages with a maximum of £2,500, with employers having to fund the employers NIC and employers pension contributions. Claims must now be made within 14 days of each month end.

For sole traders, the 3rd payment of the SEISS support scheme is now available to claim via your online personal tax account. Again, this is limited to 80% of past profits or £2,500 per month. Unfortunately, those excluded from earlier claims due to the 50:50 rule or breaching the £50k profits limit, or having started their self employment after 6/4/19 remain excluded, although mounting pressure is being put upon the Government to deal with these anomalies. The deadline for claiming the 3rd payment is 29 January 2021. It is now widely expected that there will be a 4th payment for February onwards, but no announcements have yet been made as to dates nor eligibility criteria.

There are also other grants available from your local authority, subject to eligibility criteria, many of which are discretionary, so we are seeing anomalies between different councils.

Due to the latest lockdown, there is a new “lockdown grant” for businesses in the retail, hospitality and leisure industries who have to close their business premises and can’t operate remotely. The grants vary between £4,000 to £9,000 dependant upon the business premises business rates rateable value.

If you are suffering cash flow issues due to Covid and are unable to pay your tax bills due by the end of January, you may be able to use the HMRC’s “time to pay” service.

Reduced rate VAT for tourism and hospitality extended to 31 March 2021.

In response to the continuing coronavirus health emergency, the reduced VAT rate of 5% and the consequential changes to the flat-rate scheme will now both have effect until 31 March 2021.

The reduced rate applies to supplies provided by the hospitality, holiday accommodation and attractions and reduces the rate of VAT charged from 20% to 5% on supplies of holiday accommodation, takeaway food, restaurant/cafe meals eaten on the premises, and admissions to tourist attractions.

The reduced rate was introduced on 15 July 2020 and was originally set to end on 11 January 2021, but has now been extended to 31 March 2021.

Full details of the reduced rate is available from the Gov.uk webpage:-

https://www.gov.uk/guidance/vat-reduced-rate-for-hospitality-holiday-accommodation-and-attractions#hospitality

Furlough and SEISS grant changes re November lockdown

As a result of the latest lockdown, announced on 31 October, 2020, two important changes have been made to the above schemes.

Firstly, furlough (or Coronavirus Job Retention Scheme, CJRS) was planned to end on 31 October, to be replaced by the JSS schemes, but has instead been extended for November. The furlough extension will see employers being able to claim 80% of furloughed employee wages, other criteria etc remain the same. Employees must have been on the employer’s payroll and details submitted to HMRC under RTI submissions before the end of October. **Update 5/11/20 – the furlough scheme has now been extended to March 2021 but the jobs retention bonus originally due for payment in February is now in doubt**

Secondly, there are two changes to the self employed income support scheme (SEISS). This is available to sole traders and partners who were eligible for the first two SEISS payments earlier in the year. Unfortunately, the eligibility criteria hasn’t changed, so those who were ineligible for the first two payments remain ineligible for the November onwards payments. The extension will last initially for three months from November 2020 to January 2021. The government will pay 80% of average monthly profits for November and then 40% of average monthly profits for December and January. The claims will be made monthly, with eligible sole traders and partners being able to claim from 30 November 2020 using their Gov.uk account. **Update 5/11/20 – SEISS scheme support has now been increased to 80% for each month instead of reducing to 40% – unfortunately still no change in the eligibility rules, so those excluded from claiming the first two payments remain excluded as things stand**

Details are, again, sketchy at this early stage, but hopefully more detail will be provided on the gov.uk website in due course.

National Audit Office Estimates 2.9 million self employed not eligible for Govt’s Covid support schemes

A National Audit Office report issued 23 October 2020 has estimated that up to 2.9 million self employed people havn’t been eligible for the Government’s Covid support schemes. (Para 14).

1.6 million self employed were excluded from the SEISS scheme because their trading profits in 2018/19 were less than half their total income, or losses were made, or profits were over £50,000. These criteria were only enforced for self employed and not employees, which was, apparently a ministerial decision.

Job Support Scheme Announced

*Written before the latest changes/announcements were made in week ended 23/10/20. Will be updated shortly when full details of the new schemes are published – now out of date due to second lockdown in December for which the previous furlough scheme has been extended*

The Chancellor has recently announced the replacement to the existing furlough scheme. The new Job Support Scheme will come into force on 1 November 2020.

According to the very limited information currently available, “the Government will pay a third of hours not worked up to a cap, with the employer also contributing a third. This will ensure employees earn a minimum of 77% of their normal wages, where the Government contribution has not been capped.”

Unfortunately, at the time of writing, no detailed information has been published and, for example, we simply don’t know whether directors of their own limited companies will be eligible or how their claims will be calculated, as there is the requirement to work a third of their usual hours, but directors don’t have “usual” hours. There are other areas of uncertainty too so we await further information from the Government.

Details of what has been announced so far is on the Gov.uk website in a scant 4 page factsheet.

Furlough support reducing to 70% from 1 September.

Although the amount of furlough to be paid by employers to their furloughed staff remains at 80%, the amount employers can reclaim from the Government reduces to 70% from 1 September 2020, so employers have to fund the 10% difference themselves.

Emergency Covid Funds Worth £1.5bn unclaimed

Small businesses and self employed are being urged by The Federation of Small Businesses (FSB) to claim emergency funds which are currently sat in local authority bank accounts and will be otherwise repaid to Government at the end of the month!

Read the full article on the BBC website

Self Employed Income Support Scheme (SEISS) Second Payment

Eligible self-employed people will be able to claim a second and final SEISS grant in August; this will be a taxable grant worth 70% of their average monthly trading profits for three months, paid out in a single instalment and capped at £6,570 in total.

The eligibility criteria for the second grant will be the same as for the first grant. People do not need to have claimed the first grant to claim the second grant: for example, their business may have been adversely affected by COVID-19 (coronavirus) more recently.

However, in order to claim the second grant, businesses will need to confirm that they were being “adversely affected” due to Covid on or after 14 July 2020. So if, by that time, you have re-opened your business and you’re back to normal operations, then you won’t be “adversely affected” on or after 14 July, so you’ll not be eligible for the second payment.

The Government have published some guidance as to what they mean by “adversely affected” which includes:-

“you’ve had to scale down or temporarily stop trading because:

• your supply chain has been interrupted
• you have fewer or no customers or clients
• your staff are unable to come in to work“

There is also a good article by journalist Martin Lewis on his MoneysavingExpert website, where he says:

“HMRC is not looking to try to catch people out who are making honest declarations. So even if you’re working all hours and bringing some money in, if your business isn’t where it should be and coronavirus is to blame, then you’re entitled to say yes to the grant. And the payment isn’t structured to be proportionate to the impact, it’s binary – if you’re due money, you’re due it all; if you’re not, you’re not due a penny.”

The deadline for making the second claim is 19 October 2020, so even if you’re not affected on 14 July 2020, you may be affected by further restrictions such as localised lock-downs, you may be a retailer hit by fewer customers due to compulsory face masks, or if yourself, staff or customers catch Covid, you may have to close your business for deep cleaning and/or self isolation, etc. So, even if you’re not currently adversely affected, don’t forget to bear the support scheme in mind if you become affected during August and September.

Deadline looming to start furlough

10 June is the final day an employer can furlough an employee for the first time. The Coronavirus Job Retention Scheme closes to new entrants on 30 June. After this date, only employees who have been furloughed for at least 3 consecutive weeks can be put on furlough again. 

https://www.gov.uk/guidance/claim-for-wages-through-the-coronavirus-job-retention-scheme