It seems the Coronavirus (aka COVID-19) won’t be going away any time soon, so this page is dedicated to it. Information is limited at the moment, so apologies if we do not yet know finer details. More clarity should come in due course.
We’ll keep this page updated both with clarifications on existing items, as well as new proposals soon after they’re announced.
With our typical client being a 1-2 person Ltd Co, there isn’t a great deal available. Below we’ll discuss some of the main proposals.
Job retention scheme
The system to lodge claims is now live! See our guide on how to complete for simple owner managed companies (ie just 1-2 directors on the payroll) here.
This has perhaps got most of the headlines, 80% of employees’ wages (to £2,500/month cap) paid for by the government. However, this is for “furloughed workers”. Any such workers need to be designated as such, and notified in writing, and cannot do any work for the business whilst furloughed.
The government have recently been clear that this can include directors, including those where they’re the only person in the company. Whilst it’s been confirmed you can continue to comply with your statutory obgligations as a director (eg deal with Companies House filings), you cannot do any work beyond that. Specific wording from the gov.uk website is “they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company”.
If you are still working on commercial activities, just with reduced efficiency/earnings, then you wouldn’t be able to claim.
If you cannot work/there is no work for you to do due to the impact of Coronavirus, then there is scope for a claim. It will be proportional to your salary (ie so not including dividends), as submitted in February 2020. You should put something in writing confirming your furloughed status.
Help for Self Employed
Critically this is only for those officially self employed (ie sole traders, partners in a partnership). It does not apply to Ltd Co owners.
However, for folk who had at least half their income from self employment in 2018-19 (ie so not those very recently self employed, or those with low self employed income alongside a reasonably well paid job), and are still self employed now, then you may be able to claim.
They do state you need to have lost trading profits due to COVID-19. Unsure what criteria there is for that.
If you’re happy you meet the above, work out your average taxable profit for the last 3 tax years (2016-17, 2017-18 and 2018-19). If the average is more than £50,000/year, you’re considered too high an earner so can’t claim.
If the average is less than £50,000, you should be able to get 80% of your profits, up to a cap of £2,500/month, for 3 months.
HMRC are aiming to have this funding available in June 2020, and have stressed not to contact them about this now. Ie this will not assist with immediate cash flow concerns, but could help many sole traders in a few months time.
Deferring VAT and Income Tax payments
This one our typical client can benefit from. However, it’s just deferring payments, rather than any long term saving. We would therefore suggest if you haven’t been significantly negatively impacted, that you continue to pay these on the normal dates.
If however you’re struggling for cash, it could be a help in the short run. You can then use cash that would otherwise have paid these tax bills to pay other essential services to keep you ticking over.
We understand if you have a direct debit in place for VAT, and leave it in place, they will still collect as normal. Ie if you normally pay by direct debit, and want to defer, you need to manually cancel the direct debit.
Support for businesses paying sick pay
Potentially directors who are unable to work due to illness for a fortnight could benefit from this, though it’s modest. Up to ~£190 per employee can potentially be reclaimed from the government. Some evidence will likely be required that you were not able to work. Also as things stand it’s unclear when/how that will physically be refunded, as there is currently no route in place to claim this.
Business rate payers
There are some fairly generous breaks here, in terms of reductions (primarily for hospitality/retail/leisure), and also grants for the smaller businesses. We believe your council should automatically be in touch with you if you can benefit from these.
However these are just for those who pay business rates. Ie those who have a business property independent of their home. For those of you who only work from home and/or client sites (or occasionally coffee shops/similar) there is nothing to be claimed here.
Business Interruption Loan Scheme
Like with the deferring VAT/income tax, this is just a loan. However for those who anticipate limited impact to their business long term, but a short term hit, this could help. If you want to apply for these, it should be done via the banks. The banks should be more likely to lend than normal, as the government will be guaranteeing 80% of the loan.
During the “lockdowns” we’re fully working from home for all staff, bar one member visiting the office daily to collect post. Hopefully this has lead to as little interruption to client service as possible.
Outside “lockdowns” we’re operating on circa half the staff office based, half working from home. We hope this should give the best of both worlds for all concerned.