JSS new changes announced
The job support scheme was due to change from the 1st November 2020 to a less attractive scheme from the two previous support schemes for employees. However, due to the worsening pandemic conditions and the introduction of a Tier system for local authorities the scheme has now changed again.
What are the changes
It’s just been announced that employers will be expected to pay 5% of the cost of unworked hours under the Job Support Scheme (JSS) instead of the 33% originally communicated.
When originally announced, the JSS required employers to pay one third of their employees’ wages for hours not worked. Employees were required to be working 33% of their normal hours. But today’s announcement reduces the employer’s contribution to those unworked hours to 5% and cuts the minimum hours requirement to 20%. This means that staff working just one day per week will be eligible.
We will come back and update this page with a worked example on how the payroll employee costs are calculated for employers operating payroll. Any additional government guidance on the mechanics of the scheme changes will be updated on this page.
Are you struggling to pay your tax bills?
Did you know that the second payments on account for 2019/2020, due by the 31st July 2020 was deferred automatically until the 31st January 2021. There is now an additional option if you are unable to make these payments in full by 31 January 2021.
Childminders could set up a “Time to Pay” payment plan of up to 12 months online without needing to phone HMRC. If an individual required a longer period than 12 months to repay their debt, then they need to contact HMRC to set it up.
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.
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.
We hope the process for the grant scheme is running smoothly for all clients.
Easy tips to help you through the process:-
- Go to the eligibility checker first. SEISS eligibility checker
- Create a government gateway account if you don’t already have one.
- HMRC will probably send you a code to your landline or mobile when setting up your gateway account.
- Make sure your contact details are correct and up to date.
- Please claim on the date and time period given by HMRC.
- Make sure you have your unique tax reference and national insurance number ready to input into the claim.
- 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.
- Print off the claim calculations from HMRC.
- 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.
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.
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.
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
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.
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:-
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.
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
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.
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
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.
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.
- 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 email@example.com or use our contact form on our website : www.accountancykids.co.uk
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).