We have all been paying closer attention to the news in recent times. It does look like better days are to come, with restaurants and bars been given the green light to open. While we all are excited and wanting to enjoy ourselves, please remember to social distance as this is still very vital to our fight against this virus.

 

The Chancellor, Rishi Sunak has pledged great support during these tough times and has again set the foundation for all of us to come out of this. It will be no easy job, but together we can do this. Supporting small businesses is vital.

 

The Chancellor mentioned a few things in his speech, while some of his policies apply to Wales, others do not as they are the responsibility of the Welsh Government. We digest the main points here.

 

Job Retention Bonus

 

The furlough scheme will be ending in Wales at the end of October. We are more reliant on the job retention scheme here in Wales than any other part of the UK. There are about 300,000 people on the furlough scheme. The Welsh Government has said that it does not have the "financial fire power" to be able to continue the scheme itself.

 

The Chancellor said he would be introducing a new scheme called the Jobs Retention Bonus. Under the new scheme, firms will be paid £1,000 for each employee they bring back from furlough and continuously employ through to January 2021 on an average of at least £520 a month.

 

            Eating Out Discount

 

The Chancellor has said there will be a 50% discount on food if people eat out in August on Mondays to Wednesdays. This is to try and get people using restaurants.

 

This will entitle every diner to a 50% discount of up to £10 per head on their meal, at any participating restaurant, café, pub, or other eligible food venue. There is not a limit to the amount of times the discount can be used and will be valid Monday to Wednesday on any eat-in meal (including on non-alcoholic drinks) for all of August. Participating establishments will be fully reimbursed for the 50% discount.

 

Temporary VAT Cut

 

If you supply food and non-alcoholic beverages for consumption on your premises, for example, a restaurant, café or pub, you’re currently required to charge VAT at the standard rate of 20%. However, when you make these supplies between 15 July 2020 and 12 January 2021 you will only need to charge 5%

It will apply to supplies of accommodation and admission to attractions as well. This will include takeaways, restaurants, cinemas and theme parks.

 

These are all in the pilot stages, and more information is to be released in the days to come. As soon as we know, we will also share the information with you. If there is something you want to know more about, you can call us on 02920 653995 to discuss. The introduction of these will mean we have a better chance to finish 2020 on a high.

Here is a reminder of the thresholds for the current tax year (6th April 2020 - 5th April 2021)

Personal Allowance

You do not have to pay any tax on income up to the amount of £12,500.

Band

Taxable income

Tax rate

Personal Allowance

Up to £12,500

0%

Basic rate

£12,501 to £50,000

20%

Higher rate

£50,001 to £150,000

40%

Additional rate

over £150,000

45%



National Minimum Wage

It is against the law to pay under the national minimum wage.

Year

25 and over

21 to 24

18 to 20

Under 18

Apprentice

April 2020 (current rate)

£8.72

£8.20

£6.45

£4.55

£4.15

April 2019 to March 2020

£8.21

£7.70

£6.15

£4.35

£3.90



Dividend Allowance

The dividend allowance for this current year is £2,000

Tax band

Tax rate on dividends over the allowance

Basic rate

7.5%

Higher rate

32.5%

Additional rate

38.1%


There are many more rates and threshold that will be of value when it comes to your tax affairs, we have highlighted the most frequent rates.

It has been several weeks now since the whole country has come to a standstill. We still have strict restrictions in place, however there is still a lot we can do to ensure our businesses does not just fade away. We have all put endless efforts into our business and now is not the time to just give up. You should still be on social media, promoting your business, so once all this is over, and it will all be over, your business is in the front of everyone’s minds.

 

Our previous Coronavirus Blog detailed how you could get support from the Government Retention Scheme to the grants that are available. To read our previous blog, please click here https://bit.ly/Covid19interruptionCrossAcc

 

Bounce Back Loan

 

There will be support in the form of a bounce back loan which will help you to borrow between £2,000 and up to 25% of their turnover. The maximum loan is capped at £50,000. The government has guaranteed 100% of the loan and there will not be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.

 

To be able to apply for the loan you will have to be based in the UK, have been in business before 1st March 2020 and your success or development have been impacted by the coronavirus.

 

You cannot apply if you are already claiming under Coronavirus Business Interruption Loan Scheme or COVID-19 Corporate Financing Facility. If you have already received a loan of up to £50,000 under one of these schemes you can transfer it into the Bounce Back Loan scheme. A deadline of 4 November 2020 has been set to arrange with your lender.

 

The length of the loan is 6 years, but you can repay early without paying a fee. No repayments will be due during the first 12 months and any charges for the loan will be covered by the governments guarantee.

 

There are several lenders participating in the scheme including many of the main retail banks. You should approach a suitable lender yourself via the bank’s website. The lender will ask you to fill in a short online application form and self-declare that you are eligible. The lender will decide whether to offer you a loan or another type of finance and you will be responsible for repaying 100% of the amount borrowed.

 

Self-Employment Income Support Scheme

 

In line with the Chancellors commitment to help businesses who have been affected by the coronavirus, HMRC have launched the self-employment scheme. You should receive a letter through the post stating that you may be eligible. You will have to go to the HMRC website and complete an eligibility checker to see if you are eligible. You will need your National Insurance number and Self-Assessment Unique Taxpayer Reference (UTR) number.

 

If HMRC confirm you are eligible, then you will need your Government gateway and user ID and password, if you have not created this yet, you will have to, to commence with the claim. You will have to enter your correct contact details as HMRC will contact you, using these details to tell you when the claim system is available for use.

 

HMRC will automatically calculate the income support you are entitled to, based on the information submitted from previous tax returns. After HMRC have received and checked your claim, they will pay the money directly in to your bank account in six working days.

 

You will need to make the claim yourself, although you can seek advice from an accountant. The grant is also not for limited companies or anyone operating a trade through a trust. HMRC will check claims and take action to withhold or recover payments found to be dishonest or inaccurate.

 

We are still available on the phone and by email, so if you do want to talk through what may be your best option, please feel free to contact us. We are always happy to help.

It has been a rollercoaster of a few weeks with some unprecedented times. It is a new worry that we’ve had to face, and we’ve had to face this together. The Coronavirus has not only brought the whole country to a standstill, but has slowed down the whole world.

 

However, together we must have high spirits, and come out of this stronger. We hope everyone reading this is safe and our thoughts are with those directly affected by the virus. We all must adhere to what the government are saying and stay home. Travel only if necessary as this will delay any spread and get us out of this sooner.

 

The government has pledged support for employees, and have now put together something for the self-employed. It may not be what we all wanted, however, we have to give credit to the government for the level of support they are showing.


Coronavirus Job Retention Scheme


Q: I have heard the government will contribute towards employee wages?


The Chancellor has put together an emergency temporary package to allow employers to keep on their staff. The Coronavirus Job Retention Scheme is open to all UK employers for at least three months starting from 1st March 2020. The scheme is expected to be up and running by the end of April 2020. It is designed to support employers whose day to day trade have been severely affected.

Employers can 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 NI contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period and is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.
 
Your furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including full-time, part-time, employees on agency contracts and 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 this, when on furlough, your employee can not undertake work for or on behalf of you. This includes providing services or generating revenue. While on furlough, the employee’s wage will be subject to usual income tax and other deductions. If your member of staff is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.
As an employer you will have to write to your employees confirming that they have been furloughed and keep a record of this communication. Employees hired after 28 February 2020 cannot be furloughed or claimed for. You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you. Deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

An employer can also choose to top up an employee’s salary beyond the 80% but is not obliged to under this scheme. You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until the 1st March if applicable and you will have to work out how much you can claim for,

  • Salaried Staff: 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, commission and bonuses should not be included.
  • Varied Staff: If the employee has been employed 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
However, 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, you will need to use a pro-rata for their earnings so far to claim.

Once you’ve worked out how much of an employee’s salary you can claim for, you must then work out the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.


Coronavirus Business Interruption Loan (CBIL)


Q: It’s great that the government will help with wages once it is due to be out by the end of April 2020, but how can business get help immediately?


During this interrupting time, there is bound to be a dip in cashflow, so how can businesses get an injection of cash when all trade has halted? Well the government has introduced a temporary Coronavirus Business Interruption Loan Scheme which supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.


The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.


The government will provide lenders with a guarantee of 80% on each loan to give lenders further confidence in continuing to provide finance to SMEs. This is great for businesses with low credit rating. The scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.


To be eligible your business must tick the following;

  • Be UK-based in its business activity
  • Have an annual turnover of no more than £45 million
  • Have a borrowing proposal which the lender:
    • Would consider viable, were it not for the COVID-19 pandemic
    • Believes will enable you to trade out of any short-term to medium-term difficulty

To apply, you should talk to your bank or bank manager or one of the 40 accredited finance providers as soon as possible, to discuss your business plan. You can find out the latest on the best ways to contact them via their websites or click here https://bit.ly/CrossAccCBIL


Self-Employment Income Support Scheme


Q: Will the self-employed be looked after by the government?


Great credit must be given to the government as a lot of pressure is on them during this unprecedented time. They have taken strides that no government has in history. The chancellor has left the self-employed questioning whether there would be any support. However, the chancellor has announced that there will be a scheme in place to allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.


You can apply if you’re a self-employed individual or a member of a partnership and you;

  • Have submitted your Income Tax Self Assessment tax return for the tax year 2018-19
  • Traded in the tax year 2019-20
  • Are trading when you apply, or would be except for COVID-19
  • Intend to continue to trade in the tax year 2020-21
  • Have lost trading/partnership trading profits due to COVID-19

Your self-employed trading profits must also be less than £50,000 and more than half of your income, come from self-employment. This is determined by at least one of the following conditions being true;

  • 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 started trading between 2016-2019, HMRC will only use those years for which you filed a Self-Assessment tax return. If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020. HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.


So to summarise, the grant will be 80% of average trading profits from the year 2016-17, 2017-18 and 2018-19 and will be up to a maximum of £2,500 per month for 3 months. The grant will be paid directly into your bank account, in one instalment.


You cannot apply for this scheme yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online. Again, this is looking to be all set up by the end of April 2020.


Hospitality, Retail and Leisure Business Grants

Q: I am in the Hospitality, Retail or Leisure sector, I have heard there is extra support since we’ve been effected the most, as we cannot work from home etc...


Restaurants, Cafes, Pubs and Bars have probably been hit the hardest as social distancing gets serious. The Government has forced these businesses to close earlier than any other businesses. However, there is support in the form of business rates relief. Retail, leisure and hospitality businesses with a rateable value of £500,000 or less will get one year business rates relief in the financial year 2020 to 2021. This means that you will not have to pay any business rates during this time. This will be applied through the business rates system. You do not need to do anything. Your local authority will contact you.

 

The Welsh Government is helping in the form of two grants. 


A grant of £25,000 is being made available for retail, leisure and hospitality businesses occupying properties with a rateable value of between £12,001 and £51,000. This means businesses that occupy properties such as shops, restaurants, cafes, drinking establishments, cinemas, live music venues and hotels.


Also, a £10,000 grant to all businesses eligible for small business rates relief (SBRR) in Wales with a rateable value of £12,000 or less. Again, you do not need to do anything as the local authority will contact you. More information is due to be released as this is only the pilot stage.


There is lots of information available on the Gov website; however, the main details are still being worked on. The government have laid the foundation for its intent on supporting businesses during these incredibly difficult times.


We are still available on the phone and on email as we continue to support our clients. If there is anything you need help understanding or want a chat please feel free to get in touch. These are incredibly tough times and we wish everyone the best of health and hope to come out of this stronger.


We’ve all heard of IR35, but do you know the rule changes that are being introduced? IR35 also known as the ‘off-payroll’ working rules and will kick in if a worker provides their services through an intermediary.  It’s been in the news for some time now affecting a lot of News and TV presenters and has been making big headlines.   From April 2020 this will now be affecting the private sector from any industry where they are working either through a limited company or as a sole trader but the relationship between themselves and the client could constitute an employer/employee relationship.

An intermediary will usually be the worker’s own personal service company, such as a limited company. They could also be a partnership, a managed service company, or an individual who is on self-assessment.

The rules make sure that workers, who would have been an employee if they were providing their services directly to the client, pay broadly the same tax and National Insurance contributions as employees.

 

The rules apply if a worker provides their services to a client through an intermediary but would be classed as an employee if they were contracted directly.

 

So, who decides?

 

If you’re a worker and your client is in the public sector like a school or library, it’s their responsibility to decide your employment status. You should be told of their decision; we’ve seen a large number of the larger companies starting to make changes to their arrangements with their subcontractors in preparation for this event.     This will affect everyone, including people who employ a Cleaner, a subcontractor in the building industry.   IR35 supersedes the CIS scheme i.e. its take priority over the CIS scheme above everything.

 

If you are a worker and your client is in the private sector, it’s your intermediary’s responsibility to decide your own employment status for each contract. The private sector includes third sector organisations, such as some charities.


HMRC do have a calculator on their website to help you see for yourself whether you would have to comply with the rules.

 

There are tests that are run to decide this for you.

 

https://www.gov.uk/guidance/check-employment-status-for-tax

 

Some of the tests are as follows

 

Who has the control, can you say no to projects or specific pieces of work, or are you required to take whatever work is given to you.


Do you use your own tools at work?


Do you have public liability insurance and employers liability insurance?

 

Can you send in a substitute for yourself?   Not a main point but it does get weighted on any HMRC decision.

 

The difference on what this will mean for you, is that you will no longer be able to claim the travel expenses you would have been able to claim before regardless of the distance you are travelling to work, plus you will pay the higher national insurance which currently is 12% for employees and 13.8% for  employers.   You effectively could pay out both rates, not just the one.

HMRC do not care if you have given up your employment rights, i.e. holiday pay and sick pay.    We are expecting them to spot check individuals at any point during 2020.

The costs to the private sector will be very high, we haven’t seen the updated budget expected to be out in March 2020.  But are expecting with all the news coverage and the actions the larger companies are planning, everyone could be affected imminently.

If you are facing this problem with your own subcontractors, please get in touch with us, we have a risk assessment template for our clients that they can use.   If you are a subcontractor yourself, it is worth getting in touch with your contractor to find out their plans for the system.   

A lot of these companies are planning on putting everyone on PAYE whether you receive the employment rights that go with that change, we are still waiting to see.