Claim SEISS grant from the 17th August 2020

Second grant for self employed

If your eligible to claim the second SEISS grant next week then here is a reminder how to claim and the records that you should keep.

To qualify for the second SEISS grant the business must be adversely affected by the coronavirus pandemic on or after 14 July 2020.

The Chancellor’s announcement on 29 May told us the SEISS would be extended, and now we know that businesses will able to claim a second sum of money from 17 August 2020. Once HMRC has checked the application the funds will be paid into the taxpayer’s bank account within six working days.

HMRC  rules for the extended SEISS makes it clear that claims for the second grant must be submitted by 19 October 2020.

The amount of this second and final SEISS grant will be calculated at 70% of the taxpayer’s annual average profits, capped at £6,570 for three months. The other conditions to qualify for the second grant remain the same as for the first SEISS grant, applications for which closed on 13 July 2020.

Adversely affected

The main addition to the HMRC guidance for SEISS is further emphasis on the requirement for the business to have been “adversely affected” by the coronavirus pandemic as a pre-condition for claiming the grant.

To be considered adversely affected HMRC says a business must have temporarily stopped trading, the trading has been scaled back, or the business has incurred additional costs. HMRC suggests five possible causes behind the adverse affects on the trade as:

  • supply chain has been interrupted
  • fewer or no customers or clients
  • staff were unable to work
  • one or more of the business contracts has been cancelled
  • the business has had to buy protective equipment in order to trade following social distancing rules.

The HMRC guidance was amended on 2 July 2020 to acknowledge that the trade could be adversely affected due to increased costs. For example, many businesses have had to undertake more cleaning, install screens and signage, and provide protective equipment to staff.

In addition, HMRC states that the business will have been adversely affected if the owner(s) can’t work because they are:

  • shielding themselves or someone else in their household
  • self-isolating
  • on sick leave because of coronavirus; or
  • have caring responsibilities because of coronavirus

In all cases, the taxpayer should keep records of how and why they believe their business has been adversely affected, and for which periods.

Continue to work

HMRC emphases that the self-employed taxpayer can continue to work in their business while receiving the SEISS grant.

Period of time and reduced trading

HMRC provides no guidance on how long the period of non-trading has to last for, or by what percentage the normal level of trading business has to reduce by, for the business to qualify as adversely affected. One could argue that a cessation of trading for as little as a few days would be enough.

Accurate recording of the timing of trading conditions and costs for the business will be crucial, as the second SEISS grant can only be claimed if the business is adversely affected on or after 14 July 2020.

Taxable grant

The grants  received will be included in your accounts as taxable income and assessed in your tax return 2020/21. Please keep a record of the calculations produced by HMRC and the amounts and dates that you received the two grants.

 

 

Self-employed income support scheme extended

Self-employed income support scheme (SEISS) extended to eligible self-employed.

The good news for small business, is that a final grant payment can be claimed and is open for application in August 2020.

The grant is slightly less generous than the original grant with a maximum claim capped at £6,570. The grant is worth 70% of the average monthly trading profits, paid out again in a single instalment covering three months. This is a reduction of 10% from the first round of grant claimed.

Any business applying for the second grant must confirm that they intend to trade in the future.

Any business that is trading now but is adversely affected can also continue to claim if they can prove that the coronavirus has impacted their business. There is no single measure to prove this but a good measure could be reduced sales, loss of clients and reduced profits. Other measures may include increased levels of expenditure to help you adjust to a new way of operating your business safely through the pandemic.

Job Retention Scheme changes from 1st July 2020

Are you ready to claim the new Job Retention scheme?

Starting from 1st July 2020 the scheme grant conditions change.

Employers can bring back workers on a part-time basis whilst still claiming from the scheme.
Any new employees starting after the 1st July 2020 will not be eligible for the scheme.
Any employers that have not furloughed their staff by the 10th June 2020, to allow them to complete the minimum three weeks required by the current scheme must furlough to ensure that the second scheme is available to use.

The scheme will operate on it’s current basis until the end of July 2020. The second scheme is due to close on the 31st October 2020.

Employers are expected to pay the employers national insurance and pension contributions from 1st August 2020.

Employers are expected to contribute 10% of the 80% payable to employees from the 1st September 2020 including the employers national insurance and pension contributions.

Employers are expected to contribute 20% of the 80% payable to employees from the 1st October 2020 including the employers national insurance and pension contributions.

Tips – self employed income support scheme

We hope the process for the grant scheme is running smoothly for all clients.

Easy tips to help you through the process:-

  1. Go to the eligibility checker first. SEISS eligibility checker
  2. Create a government gateway account if you don’t already have one.
  3. HMRC will probably send you a code to your landline or mobile when setting up your gateway account.
  4. Make sure your contact details are correct and up to date.
  5. Please claim on the date and time period given by HMRC.
  6. Make sure you have your unique tax reference and national insurance number ready to input into the claim.
  7. Watch out for a declaration section about trading in 2019/2020 and intending to trade in 2020/21. The answer to this section may determine your eligibility for the claim, so be certain about your trading activity in 2019/20 and your current intentions going forward.
  8. Print off the claim calculations from HMRC.
  9. If your eligibility is negative and you don’t understand why, then phone HMRC on 0800 024 1222.

Any current client that is unsure how HMRC have worked out their claim can drop us an email and upload the calculations to their portal account. We’ll then have a look at the claim calculation. We can offer this additional free service to our clients if we prepared your 2016/17, 2017/18 and 2018/19 tax returns.

Any existing client with less than three completed tax returns should also contact us if they are uncertain of the calculations. Please make sure that you have only used our services over this period.

 

Self-employed income support – latest update

When is the SEISS going live

The self-employed income support scheme (SEISS) will be open for applications from 13 May, but we are barred from claiming the grant on behalf of clients.

On 4 May HMRC started to contact taxpayers who it believes are entitled to claim an SEISS grant, telling them to be ready to claim when the portal opens next week.

How will HMRC contact you ? 

The initial contact to self-employed taxpayers is being made by email. Or, if the taxpayer has no email, HMRC will text message where it has a mobile phone number. Only where HMRC does not hold an email address or mobile phone number for the taxpayer will it send a physical letter, but this letter may not arrive until next week.

There are already numerous scam texts circulating purporting to be from HMRC, for example, a client was asked to reply with their UTR number. This information could be used by the scammer to make a fraudulent claim.

The genuine emails and texts from HMRC do not include an active link to click on; they only tell the taxpayer to be ready to claim. 

The fact that the taxpayer has received this initial contact about the SEISS grant from HMRC doesn’t mean that they will meet all the criteria to receive the grant. HMRC will have the information about the trader’s profits for the years to 2018/19, but to claim the SEISS the taxpayer must also have traded in 2019/20 and be intending to trade in 2020/21. This information about current and future trading intentions will not yet be available to HMRC.

HMRC is encouraging taxpayers to use its SEISS eligibility checker tool to check whether they can claim. However, this online tool only asks for the taxpayer’s UTR and NI numbers, it doesn’t ask about current or future trading intentions.

The taxpayer is not required to use the checker tool in order to make a SEISS claim. However, if they do use it and provide an email address as requested for further correspondence, this may speed up the process of the claim. HMRC will use that email address to tell the taxpayer exactly when the SEISS portal will be open for them. This will be a specific date between 13 and 18 May, with different days allocated to different taxpayers.

HMRC has advised that agents should not use their clients’ credentials to apply for grants on behalf of clients and that doing so may trigger HMRC fraud checks and delay payment of the grant.

There will be a telephone-based SEISS grant application service for the digitally excluded to use, but HMRC has not released any details of that yet.

Funding for new SME’s in Scotland

BREAKING NEWS: Newly self-employed support
The Scottish Government has announced a £100 million fund to support the self-employed and SMEs. It will be broken into three separate funds which will help a range of vulnerable SME businesses, those who are newly self-employed and creative, tourism and hospitality enterprises (21 April)

If you are newly self-employed and facing hardship, you will be eligible for a £2,000 grant through the Newly Self-Employed Hardship Fund. It will be managed by Local Authorities. Applications open at 2pm today. http://www.findbusinesssupport.gov.scot

Not sure if similar grant funding will be announced in England this evening at the daily briefing.

Self-employment Income Support Scheme – Childminders

The self employed income support scheme grant should be operational by June 2020. The scheme will run from the GOV.UK website.You will be contacted by HMRC and invited to apply online. Please don’t contact them as it will slow down the time frame for commencement of the grant scheme.

How much is the grant

The grant is based on three months of average trading profits on completed tax returns for 2016/17, 2017/18 and 2018/2019.

The grant is payable at 80% of average monthly trading profits, up to a maximum of £2,500 per month.

If you started trading between 2016 and 2019, HMRC will only use those years for which you filed a Self-Assessment tax return.

How is the grant calculated

Example 1

Helen started her childminding business in 2014 and recently temporarily closed her business on the advice of the United Kingdom Government and her childminding organisation SCMA / PACEY.

In this time she has generated the following trading profits from her business and she also has a part-time employment job.

2016/2017 – £15,000 (part – time employment £6,000)

2017/2018 – £20,000 (part-time employment £6,100)

2018/2019 – £22,000 (part-time employment £6,200)

The combined trading profit over the three years is £57,000 and we divide this by 36 to work out a monthly average of £1,583. The grant is payable at 80% over three months so Helen would receive £1,266 x 3 months = £3,798 from the grant scheme.

(£15,000 + £20,000 + £22,000 = £57,000 / 36 = £1,583 x 80% = £1,266 per month x 3 months = £3,798)

Although Helen also has a part-time job the majority of her income is generated from self-employment > 50% so she is still eligible for the scheme.

Example 2

Rebecca started her childminding business in 2012 and during this time generated the following trading profits:-

2016/2017 – £50,000 

2017/2018 – £52,000 

2018/2019 – £49,000 

The combined trading profit over the three years is £151,000 and we divide this by 36 to work out a monthly average of £4,194.

(£50,000 + £52,000 + £49,000 = £151,000 / 36 = £4,194 x 80% = £3,355 per month ) – The maximum that can be claimed is £2,500 per month or £7,500 for the three month period.

Although Rebecca has breached the average three year annual profit cap at £50,333 she can still claim the grant because she still meets one of the eligibility rules that her trading profits were below £50,000 in tax year 2018/2019.

Commencement of business in 2016/2017

Anyone who started a business during tax year 2016/2017  and the tax period was less than twelve months are currently confused if the profit / loss represents a full year when working out the three year average. Although this may seem an unfair reflection of  a childminding business with a full taxable year, it’s probably how the averages will be calculated in the formula.

We are currently second guessing on how a loss would be treated in the calculation but if we follow normal tax procedures  then it’s likely that the loss is recognised at zero. The trading profits would then be calculated in the example as follows:-

Example 3

Julie started her childminding business in October 2016 and during this time generated the following trading profits:-

2016/2017 – £(5,000) loss

2017/2018 – £10,000

2018/2019 – £20,000

(£0 + £10,000 + £20,000 = £30,000 /36 = £833 x 80% = £666 per month x 3 months = £1,998)

How are the grants payable

The grants are payable into a UK bank account, via BACS as a one off payment to you. The grants are not repayable to HMRC but must be shown as income on your profit and loss accounts.

Who can apply

Any self-employed business including childminding partnerships are eligible to apply if they:-

  • 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.

Exclusions from grant

  • Any new business that started in tax year 2019/2020, the tax year starts on the 6 April 2019.
  • Any business that has not completed and submitted their 2018/2019 tax return by 23 April 2020.
  • Any business that has other income greater than 50% of their self-employed business.

Top tips for easy completion of online application

  • Dig out all your previous tax returns now. 
  • Talk to your Accountant about uploading any missing tax returns to the client portal.
  • Find out what information is required to complete the online form / template.
  • Build a simple table spread sheet with all the relevant information including trading profit for three years, bank account name, account number and sort code.
  • Complete your 2018/2019 tax return by the 23 April 2020.

Look out for scam correspondence

This scheme is likely to be targeted by scammers claiming to be from HMRC. At the moment it is not clear how or when HMRC will contact you about this. But if you’re self employed you should have already received an email from HMRC explaining the scheme and telling you there is no reason to contact HMRC about this.

If you are contacted by email, phone or text by someone claiming to be from HMRC at this time offering you the income support grant, tax refund or any other financial help, this is a scam.

Other support options available for childminders

Time to pay scheme – (see blog below)

Any business with outstanding self assessment income tax may approach HMRC and ask for time to pay. They may implement a payment plan with the individual. 

Deferring Self-Assessment payments on account

If you’re due to pay a self-assessment payment on account by 31 July 2020 but the impact of the coronavirus causes you difficulty in making payment by that date, then you may defer payment until January 2021.

Eligibility

You are eligible if you are due to pay your second self-assessment payment on account on 31 July.

The deferment is optional. If you are still able to pay your second payment on account on 31 July you should do so.

How to access the scheme

This is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment until 31 January 2021.

During the deferral period you can set up a budget payment plan to help you pay the deferred payment on account when it comes due.

If you’re in temporary financial distress because of COVID-19 more help is available from HMRC’s Time to Pay scheme

Universal Credits

If you are excluded from the self-employed income support grant scheme then you may be eligible for Universal Credit from the Department of Works and Pensions. There are certain rules for application and the credits are usually based on the minimum income floor but they are temporarily abolished from 6 April 2020.

When claiming for Universal Credits check that your combined savings with your spouse or partner are less than £16,000 to avoid exclusion, this would also include money set aside to pay for a large tax bill.

You must apply for an advance rather than waiting weeks for the first payment, you can get some cash within five days. Advance payments were originally paid back over 12 months but have now been extended to 24, in an effort to help struggling families.

If you want to claim Universal Credit while waiting for the self employed grant to be paid, you need to remember the grant will need to be declared as income. It is unlikely that the universal credit weekly payment will change during this period when the self-employed income grant is paid in June 2020.

There are no rules to stop you claiming universal credits and the self-employed income support scheme, if you require immediate financial support then claim both (Universal Credit telephone number 0800 328 5644).

You might be able to claim Budgeting Advance to help with emergency household costs of up to £348 if your single, £464 if you’re part of a couple or £812 if you have children. These are only in cases if your cooker or washing machine break down or for help getting a job.

Council tax

One of the largest bills that a household suffers is council tax and water rates bills. You might be able to get a discount on your council tax bills.

Please have a look on your local council website to see if anything is available or give them a call if your in financial distress.

Job Retention Scheme

If you have assistants working for you then furlough them and claim the Job Retention Scheme payable for three months initially from the 1st March 2020. An employer can claim 80% of the usual monthly wage costs, up to £2,500 a month.

Mortgage holiday and loans

Mortgages

Ask your lender for a mortgage payment holiday for three months to free up cash flow. There are also childminder clients who operate as a landlord and they too are eligible for a payment holiday from their lender.

Loans

You can login to The British Business Bank to access the Business Interruption Scheme. A minimum of 40 lenders are involved in the scheme and interest free loans of £25,000 may be acquired with no interest payable for the first twelve months. Please be careful if you decide to try and obtain a loan as some banks are reported to be charging 30% interest .

You may not have a business bank account but if you do then contact your existing lender to see what funding may be available or use the online application process from the bank’s website. It might also be worth contacting your personal bank to see if they can offer any assistance during this time.

This might not be the best or the cheapest support for childminders to use but the option may still be available for larger childcare settings with employees who require larger support options.

Our financial support

As part of your support packages it’s incredibly important that you keep on top of your financial affairs by completing your annual  accounts and online tax returns in a timely manner.

A good example why you should do this is the deferral of the payments on account due on the 31st July 2020. If you haven’t submitted your self assessment tax return for 2019/20 then how will you know if you even owe the second payment at the end of July 2020. It’s surely reassuring to know how much is still due and make a payment plan budget to repay this by 31st January 2021 without penalties and interest accruing.

Help available

  • Any new client will receive a discount in their first year with us.
  • A fee payment holiday may be available.
  • We will consider client by client any request to pay fees by instalment.

We have produced this guidance to try and help the childcare sector at this difficult time. We will also provide a simple table template for any clients or new clients that require our help completing the self-employment income support scheme grant application.

Please contact us at mcdowallaccountancy@windowslive.com or use our contact form on our website : www.accountancykids.co.uk

 

 

 

 

COVID19 – Government support measures for business

Job Retention Scheme

If you had to close your setting then the government will pay 80% of your employee wages backdated to the 1st March 2020. This is capped up to a monthly payment of £2,500 per month. Employers will be able to contact HMRC for a grant to cover most of the wages of people who are furloughed and kept on payroll, rather than being laid off. This is open for initially three months and will be extended if necessary. How this will work is still uncertain and payroll software is not geared up to operate this change but I’ll keep everyone informed with any new information on how the reimbursement will be paid to employers.

SSP – Day 1

If any employee had to self isolate from the 28th February 2020 then SSP is paid from day one, the employee doesn’t require a doctors certificate and there is no three day waiting period. This will cover up to 2 weeks per eligible employee who has been off work because of COVID-19.

Employment support allowance / universal credit

If you had to close your setting then you can claim £94.25 per week increasing to £95.85 per week from the 6th April 2020 from the department of work and pension, this is payable up to 28 weeks. Please see my website for further detail.

Time to pay

During this difficult time a childminding business  must not hesitate to telephone HMRC and ask them for time to pay. This may include an agreed payment plan to help you when your business may be closed temporarily and when you have no income from your business to pay outstanding tax  payments. This interaction should ensure that any potential additional penalty fines and interest may be frozen when your cash flow is critically low. Please deal with your own personal circumstances and be proactive in tackling difficult times for your childminding business. It is reasonable to expect HMRC to consider a reasonable excuse for a viral pandemic.

Deferring income tax payments

If you have payments on account due by the 1st July 2020 then you can defer this payment until the 31st January 2021. Once I have prepared your accounts and tax return for 2019/2020 (if applicable) then we should carefully review any payments on account and reduce or cancel entirely.

Business Rates holiday

If you run a nursery in England then there is a 12 month business rates holiday.

Mortgage holiday

You can take a three month mortgage holiday if you have a mortgage. You can claim for this online with the completion of an application form but if you bank with Barclays and HSBC then you still need to talk to an advisor.

Renters and landlords

The government has announced a radical package of measures to protect renters and landlords affected by coronavirus. As a result, no renter in either social or private accommodation will be forced out of their home during this difficult time.

Emergency legislation will be taken forward as an urgent priority so that landlords will not be able to start proceedings to evict tenants for at least a 3 month period. As a result of these measures, no renters in private or social accommodation needs to be concerned about the threat of eviction.

Recognising the additional pressures the virus may put on landlords, we have confirmed that the 3 month mortgage payment holiday announced yesterday will be extended to landlords whose tenants are experiencing financial difficulties due to coronavirus. This will alleviate the pressure on landlords, who will be concerned about meeting mortgage payments themselves, and will mean no unnecessary pressure is put on their tenants as a result.

At the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances.

Business Interruption Loan

The British Businesss Bank will deliver the loan scheme, all the major banks are involved. There is support of up to £5 million and the loans can be for a period as little as 3 months to 10 years.

Small Business Grant Scheme

The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.

Eligibility

  • your business is based in England

  • you are a small business and already receive SBBR and/or RRR
  • you are a business that occupies property

I hope this information helps you with any uncertainty about the help available and hopefully we will see additional support for the self employed this week.

Covid-19: Time to pay arrangement for outstanding tax liabilities

HMRC has a set up a phone helpline to support businesses and self-employed people concerned about not being able to pay their tax due to coronavirus (Covid-19).

The helpline allows any business or self-employed individual who is concerned about paying their tax due to coronavirus to get practical help and advice.

For those who are unable to pay due to coronavirus, HMRC will discuss your specific circumstances to explore:

  • agreeing an instalment arrangement
  • suspending debt collection proceedings
  • cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately.

 

The helpline number is 0800 0159 559 . The helpline is open from Monday to Friday 8am to 8pm, and Saturday 8am to 4pm (excluding bank holidays).

SSP and employment support allowance

SSP

The government has announced that any employees who are diagnosed or self isolates because of the coronavirus will be entitled to SSP from day one.

They will bring forward legislation which will allow certain employers (i.e. those with less than 250 employee) to reclaim up to fourteen days SSP per eligible employee affected by COVID-19.

The weekly allowance for SSP will increase from £94.25 to £95.85 from 6th April 2020.

Specific details of how this will happen have not yet been finalised. The government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible. Existing systems are not designed to facilitate employer refunds for SSP.

Self employed employment and support allowance  

The self-employed are not eligible for SSP but employment and support allowance will be available at a rate of £73.10 a week. Any eligible people affected by coronavirus or self-isolating will be entitled from day one rather than day eight.

The government is continually updating their website but if you have a claim then you should contact the Department for Work and Pensions.  Please follow this link http://www.gov.uk/government/news/coronavirus-support-for-employees-benefit-claimants-and-businesses