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.

 

 

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.

Whether you are a registered childminder, self-employed childcare provider, foster parent or run a childcare facility you should be signed up to a pension scheme. Whilst the rules are different depending on if you are employed or self-employed the theory behind pensions is the same – you need to save for your retirement!

Employer

If you are a childcare employer there are specific rules you must adhere to regarding pension provision. All employers have a legal obligation to provide a pension scheme for any of their employees who wish to join a pension scheme – this applies if you have hundreds of employees or just one. If your employee does not qualify for a workplace pension scheme you do not have to legally enrol them into one. However if they request to join a workplace pension scheme the employer cannot refuse. If your employee does not qualify and they do not want to be enrolled in a scheme there are still obligations you have to adhere to by The Pension Regulator.

Each pension will have contributions made into it by the employee, the government and the employer so it is imperative that you keep full records of what is being paid and to where. The most common pension scheme for employers is the government’s own pension scheme, NEST.

It is worth noting that there are different requirements for your employees joining the scheme. For instance, an entitled worker – someone who is aged between 16 and 75 and has earning either at or below the lower level of qualifying earnings (currently £512 per month or lower) – can join their employer’s scheme however the employer is not obliged to make contributions on their behalf.

You can find out more information on the different requirements for the employers workplace pension scheme here.

Employer Contributions

The contribution requirements made by both the employee and the employer varies depending on which workplace pension scheme you have enrolled in. We provide a pension service through our monthly payroll provision using NEST which we can discuss with you.

Currently the minimum contribution set by the government is 8 per cent of your salary and this must be made up by both the employer and the employee, although the minimum employee contribution must be 5 per cent – which is approximately 4 per cent of your take home pay. There are currently no maximum restrictions.

Self-Employed

Unfortunately being self-employed means you do not have an employer making contributions into your pension on your behalf or even choosing where your pension is held so it is important to do some thorough research before choosing where to open your pension scheme. The Pension Advisory Service recent research found that less than a third of self-employed people are paying into a pension.

The government scheme NEST isn’t just for employees. The guidance from NEST is that you can usually join if you’re self employed. To check your eligibility and start saving, visit the self employed page  on NEST’s website.

Although you do not get employer contributions you do get some tax breaks, for example you are entitled to tax relief on your contributions. If your a basic-rate taxpayer, this means you’ll get an extra £25 for every £100 you pay in, when you come to do your tax return.

I hope you find this article interesting and if you require payroll services including pension provision then please contact us by email at mcdowallaccountancy@windowslive.com.

 

 

When setting up your childcare setting there are many things you need to take into consideration; the location, how many staff you may or may not require, how many children you can legally accept and are there any alterations to the setting required. But you also need to think about how you will get paid.

 

Most childcare settings are set up so that parents can either pay via cash, bank transfer or even through childcare vouchers. But how does this work for childminders?

 

Childcare vouchers have been made available through a parents’ wage packet to provide benefits to both the organisation and the parent. While the parent can make savings in the amount of provision they pay for – up to £1,000 in some cases thanks to the vouchers being exempt from NI and tax – the childcare setting accepting them know they are guaranteed payment, so long as they are registered or approved.

 

By being a registered childminder (eg CSSIW, Ofsted & Care Commission) you will be eligible to become affiliated with one of the many childcare voucher companies available. Once you have this system in place you should advise the parents or guardians of the children in your care which voucher scheme you have signed up with. If you only have a few families it may be worth discussing it with the parents first so you can make sure you sign up to a scheme that their employer works with.

 

In the first instance you would need to inform the parents your account or reference number from the childcare voucher company. You do not need to give them your bank details, unless the voucher is only part payment for your services.

 

Once everything has been set up between you, the affiliate, the parents and their employer, you can start accepting vouchers. These are usually paid via a bank transfer however in some cases you may receive a physical voucher that will need to be redeemed either by post or online.

 

Depending on which voucher provider you have chosen you should receive a direct bank transfer (BACS) or cheque, usually within 4 working days after the parent has requested the payment. It is imperative for your business records that you keep full records of all payments, vouchers and parents information for future reference.

 

Sometimes you may receive a payment for more money than is required for that month’s contracted childminding hours. If this is the case you can either reduce the amount from the next month’s quota or ask the voucher company to carry the amount forward as a credit on their next month’s invoice. You can also arrange a refund back to the parents.

 

As with all financial aspects of a business you must keep clear records, especially for tax return purposes. If you are a childminder and not sure what you should or shouldn’t keep, or if you are struggling with the financial requirements of being a childcare provider, contact us for an informal chat about your accounting needs. We offer a range of services that include accountancy, tax and pensions.

All businesses need to keep information for accounting purposes – especially when putting together their end of year tax returns. But what does and doesn’t need to be kept? We’ve put together a handy guide to help you whether you’re a large nursery or self-employed childminder.

Childminder

Childminding is different to other forms of childcare provision as it is a service you are providing in your own home. You will already have had your Ofsted inspection and, once approved, can start putting your paperwork in place.

As you are working in your own home you will need relevant public liability insurance. There are many companies that specialise in childcare settings and will be able to assist you in making sure you have the correct, legal cover for your home. As with all paperwork, you must keep copies of the certificate for 6 years from the end of the last financial year.

You will also have to register yourself as self-employed which means you will have to prepare your own tax returns, which in turn will let you know how much income tax and national insurance – if any – you will need to pay. For your tax returns you need to make sure you keep records of everything you have to pay for, including insurances, toys, food, drink and business mileage if required. As you are working from your home setting you can also claim for a share of your household bills including your heating, lighting, water and council tax.

You can also make a claim for milk payments if the child/children are under 5 years old, or formula if they are under 12 months.

If you have any children coming to you that require local authority payments you must also keep all records. The same applies to any childcare vouchers you receive as well as bank transfers and cash. Childcare fees in are just as important as expenditure purchase invoices or till receipts so any payment you receive regarding a child in your care must be kept with full information of who paid the money, how, when and how much.

Creches and Nurseries

If you are running a crèche or nursery the paperwork you have to keep is very similar to that of a childminder. As well as all the payments coming in and the costs of running your setting – heating, rates, rent, food, equipment – you must also keep records of insurances, staff wages – including NI and tax payments, training course fees and visitor costs – such as a sign language tutor or a children’s entertainer.

You would also need to keep all your paperwork when dealing with a parent or guardian, the local authority or any other company that you deal with.

As with childminders, you must keep all paperwork for 6 years from the end of the last financial year. Paperwork must be kept secure and you must be able to

have easy access to it.

Many childcare providers do not feel they have the time or the experience required for keeping all their paperwork together and this is where companies such as ourselves can step in. We can provide an accounting service that covers everything – including tax returns, pensions, wages – or we can provide one off services such as putting together your tax return. Contact us today for more information on what would work best in your setting.

 

The government has set minimum levels of contributions that must be paid to the workplace pension. Employers must actively budget for the additional staffing costs of the new pension contributions increases from 6th April 2019.

The current rates under automatic enrolment are that the employer contributes 2% of the qualifying earnings and the employee contributes 3%. Earnings from employment can include salary, overtime, commission and bonuses. The new contribution rates will increase to 3% for the employer and 5% for the employee.

All employers must factor this increase into their budgets and make employees aware of their increase in contributions in a timely manner. The 8% total contribution may in some instances be paid by the employer if they wish to meet the burden of this extra cost.

The government pays into the pension scheme by giving tax relief on your contributions. The tax relief is at the basic rate of tax 20% and the pension provider claims the additional tax relief on your behalf and adds it to your pension pot.

We operate the government scheme NEST on behalf of our payroll clients. Please give us a call on 01698 421774 or 07543019957 if you wish to discuss setting up and operating this scheme.

Did you see our advert in Home Childcarer magazine issue this month. We have supported the childcare sector for over five years and as a thank you we want to invite you to take up one of the 50 first new client discounts.

All you have to do is drop us an email or complete the new client form and we will  contact you about your business requirements and confirm a fixed fee for our services.

We can help you take the stress out of your financial obligations. Receive the service you deserve with a 10% new client discount and join a specialist childcare practice that really represents the childcare sector.

We regularly advertise in the following magazines:- Pacey, Childminding and now Home Childcarer.