The government has put in place a number of measures to support businesses and workers during the coronavirus outbreak. Here is a summary of the major announcements and points for business owners to consider.
VAT
Any VAT payment to HM Revenue and Customs that would normally be due between 20 March and 30 June 2020 can be deferred until 31 March 2021.
If you now anticipate that your business turnover will fall below £83,000 for the next twelve months, you may consider de-registering from VAT. However, there are many traps with this so please seek professional advice before taking any precipitate action.
Corporation tax
It might be worthwhile considering extending your financial year end so that the more profitable earlier part of the period is averaged with the current less profitable period; in this way, your following corporation tax bills will reflect any loss of profits sooner.
Income tax and NIC
The self-assessment payment due on 31 July 2020 can be deferred until 31 January 2021.
Time to pay
If there are difficulties in paying taxes, including corporation tax, income tax, PAYE and NIC and VAT, you can negotiate a time to pay arrangement with HM Revenue and Customs. The telephone number for the dedicated Covid-19 assistance line is 0800-024-1222.
Government assistance
If you are self-employed, you may qualify for the Self-employed Income Support Scheme. Eligibility is determined by either:
- having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income
- having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period
If you are an employer (including an employer of yourself), you may qualify for the Coronavirus Job Retention Scheme. The Government, via HM Revenue & Customs, will repay 80% of the normal salary costs including employer’s national insurance and minimum pension contribution of any furloughed employee. It should be noted that employees will need to agree to be placed on furlough and we recommend documentary evidence be retained of this. Employees are not allowed to carry out any work for the company for as long as they are on furlough.
Employers are able to reclaim any Statutory Sick pay paid to employees required to self-isolate for up to two weeks, starting from the first day of self-isolation. We recommend that employers retain copies of evidence that such self-isolation is a requirement wherever this is possible.
Loans
The Government will guarantee 80% of any bank loan taken out under the Coronavirus Business Interruption Loan Scheme.
We recommend that full business forecasts be prepared before taking any loan as it will be very difficult to increase any loan already agreed if it becomes apparent that you have not asked for enough. Please also consider the effects on your personal finances of any personal guarantees etc that you may be asked to agree, although the main lenders have indicated that they will not usually require a personal guarantee for loans of less than £250,000.
Business Rates Relief
The relief usually only applies to retail businesses with a rateable value under £51,000. This has now been extended to cover all retail businesses, regardless of their rateable value. The relief also applies to leisure, hospitality and nursery businesses, so museums, theatres, gyms, pubs, shops, music venues, restaurants and hotels will pay no business rates in 2020/21. Depending on your local authority this should apply to your next council tax bill.
For more tax planning advice, contact Paul at:
pu@morriscrocker.co.uk
023 9248 4356