VAT Payment Deferrals

The Chancellor, Rishi Sunak, announced a VAT payments deferral on 20 March to support businesses suffering with cash flow problems during the COVID-19 pandemic.

If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to:

• defer the payment until a later date

• pay the VAT due as normal

By cancelling your Direct Debit to HMRC with your bank, you will opt in for the deferral. However, if you do not cancel this, HMRC may attempt to automatically charge VAT on receipt of your VAT return. There is no need to inform HMRC if you wish to defer your payment. If you wish to, you can continue to make payments as normal during the deferral period.

HMRC will also carry on paying repayment claims as normal. You must continue to submit VAT returns as normal. VAT payments due following the end of the deferral period will have to be paid.

Further information about how to repay the VAT you’ve deferred will be available soon.

If you would like free advice from a Chartered Management Accountant during this period, please do not hesitate to contact us– we would be more than happy to support small businesses in any way we can!

Covid-19 Birmingham City Council Business Rates Grants

Covid-19 Birmingham City Council Business Rates Grants

Birmingham City Council have approximately 16,000 business which may be eligible and are adopting a pragmatic, risk-based approach top payment of the Business Rates Grants. This involves making payments directly to business bank accounts via BACS and carrying out pre-validation checks. This targeted approach enables payments to some businesses earlier than others, whilst ensuring that more stringent checks are applied to the medium and higher risk groups:

Lowest Risk

Group A) RV less than £51K, paid up for 2019/20 & bank details held

Group B) RV less than £51K, paid up for 2019/20 but no bank details

Medium Risk

Group C) Qualify for small Business Rate Relief (SBRR) with NIL to pay and bank details

Group D) Qualify for SBRR with NIL to pay, no bank details

Higher Risk

Group E) RV less than £51k with multiple properties linked to PIN in RBIS – mixture of D/D & not.

Birmingham City Council’s Approach to Making Payments

On the 2nd April, an Online form was made available on the BCC website enabling Rate payers to submit their details:

https://www.birmingham.gov.uk/xfp/form/714

The website and the Online form contains guidance on how to check the Valuation Agency website https://www.gov.uk/correct-your-business-rates for the correct Rateable value as well as link and a declaration on State Aid limits www.gov.uk/state-aid; both of which support validation, fraud prevention and the ability to retrieve payments where necessary. The submitting of a form will enable Rate payers to provide business bank details and Revenues staff to carry out other checks against the data provided, but primarily it will enable payments to be made more quickly and efficiently and enable an Audit trail for post payment Government assurance. Validation checks will begin on Monday 6th April in preparation for the processing of payments later in the week.

Whilst every effort is being made to obtain bank account details for businesses to enable the grants to be paid by BACS, where businesses do not contact Birmingham City Council or respond to their requests for bank details, they may be forced with send a small number of grants by cheque.

Latest Government Support Packages

25/03/2020

As you may be aware, the government have released many new packages designed for both small and large UK businesses being affected by the coronavirus pandemic. Along with HMRC, they are currently working to establish systems for their outlined schemes, detailed below.

They have also recently indicated more support specifically for self-employed and freelancers, paying 80% of their monthly earnings (possibly based on the last three years, up to a maximum of £2917). More on this will be announced in the coming days.

Coronavirus Job Retention Scheme

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying some of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

All UK businesses are eligible.

How to access the scheme

You will need to:

– designate affected employees as ‘furloughed workers,’ and tell your employees about this change

– changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation

– submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will publish further details on the information required) HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500/month. HMRC are working quickly to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers. If your business needs short-term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.

Deferring VAT and Income Tax payments

The government will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be put off to January 2021. VAT For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.

All UK businesses are eligible.

How to access the scheme

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment in this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will, as normal, be paid by the government.

Income Tax

For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.

If you are self-employed you are eligible.

How to access the scheme

This is an automatic offer, and no applications will be required. No penalties or interest for late payment will be charged in the deferral period. HMRC will also scale up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.

Sick Pay Support

The government will bring forward legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to the coronavirus.

The eligibility criteria for the scheme will be as follows:

– this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19

– employers with fewer than 250 employees will be eligible

– the size of an employer will be determined by the number of people they employed as of 28 February 2020

– employers will be able to reclaim expenditure for any employee who has claimed SSP(according to the new eligibility criteria) as a result of COVID-19 employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website – eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force – the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible

Eligibility

You are eligible for the scheme if:

– your business is UK based

– your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020

How to access the scheme

A rebate scheme is being developed. Further details will be provided in due course by HMRC once the legalisation has passed.

Support for retail, hospitality and leisure businesses that pay business rates

Business rates holiday for retail, hospitality and leisure businesses We will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year. Businesses that received the retail discount in the 2019 – 2020 tax year will be rebilled by their local authority as soon as possible.

Eligibility

You are eligible for the business rates holiday if:

– your business is based in England –

your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

– as shops, restaurants, cafes, drinking establishments, cinemas and live music venues

– for assembly and leisure – as hotels, guest & boarding premises and self-catering accommodation

How to access the scheme

There is nothing for you to do. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible. You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator. Further guidance for local authorities is available in the expanded retail discount guidance.

Cash grants for retail, hospitality and leisure businesses

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property. For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000. For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.

Eligibility

You are eligible for the grant if:

– your business is based in England

– your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:

– as shops, restaurants, cafes, drinking establishments, cinemas and live music venues

– for assembly and leisure – as hotels, guest and boarding premises and self-catering accommodation

How to access the scheme

You do not need to do anything. Your local authority will write to you if you are eligible for this grant. Guidance for local authorities on the scheme will be provided shortly. Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

Support for nursery businesses that pay business rates

We will introduce a business rates holiday for nurseries in England for the 2020 to 2021 tax year.

You are eligible if your business is based in the UK.

Properties that will benefit from the relief will be hereditaments: – occupied by providers on Ofsted’s Early Years Register – wholly or mainly used for the provision of the Early Years Foundation Stage

How to access the scheme

There is no action for you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill to exclude the business rate charge. They will do this as soon as possible. You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator. Further guidance for local authorities is available in the nursery discount guidance.

Support for businesses that pay little or no business rates

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

You are eligible if:

– 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

How to access the scheme

Support for businesses through the Coronavirus Business Interruption Loan Scheme

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch early next week to support primarily small and medium-sized businesses to access bank lending and overdrafts. The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

Eligibility

You are eligible for the scheme if:

– your business is UK based, with turnover of no more than £45 million per year

– your business meets the other British Business Bank eligibility criteria

How to access the scheme

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all. You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow. The scheme will be available from early next week commencing 23 March.

Support for larger firms through the COVID-19 Corporate Financing Facility

Under the new Covid-19 Corporate Financing Facility, the Bank of England will buy short term debt from larger companies. This will support your company if it has been affected by a short-term funding squeeze, and allow you to finance your short-term liabilities. It will also support corporate finance markets overall and ease the supply of credit to all firms.

All UK businesses are eligible.

How to access the scheme

The scheme will be available early in week beginning 23 March 2020. We will provide information on how to access the scheme here shortly. More information is available from the Bank of England.

Support for businesses paying tax: Time to Pay service

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

Eligibility

You are eligible if your business:

– pays tax to the UK government

– has outstanding tax liabilities

How to access the scheme

If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC’s dedicated helpline: 0800 0159 559.

If you would like to discuss further any of the mentioned support schemes for your business, feel free to contact us for a free phone call with a Chartered Management Accountant.

We are here to help you.

Employment Allowance Changes

Employment Allowance Changes- April 2020

From 6 April 2020 you will only be able to claim EA (Employment Allowance) if your Class 1 National Insurance bill was below £100,000 in the previous tax year.

Before making a new claim

From April 2020 you’ll need to make extra checks (explained below) to find out if you’re eligible to claim EA.

You’ll continue to claim EA through your Employer Payment Summary (EPS), but claims will not renew so you’ll need to make a new claim for EA each year.

Are you eligible?

From 6 April 2020 you can only claim EA if your total (secondary) Class 1 National Insurance contributions (NICs) liability is less than £100,000 in the tax year before the year of claim.

More than one payroll

Add together the employer’s (secondary) Class 1 NICs liabilities for each payroll, if you have more than one payroll (in the tax year before your claim).

If the total amount is:

£100,000 or more you will not be eligible to claim EA
under £100,000 you should decide which one makes the claim

Deemed payments

You do not need to include deemed payments in your calculations. Any deemed payments you make, such as to workers not on payroll, do not count towards the £100,000 employers (secondary) Class 1 NICs total. You can’t claim EA for these workers.

De minimis state aid

Check you will not exceed the de minimis state aid threshold

From 6 April 2020 EA will operate as de minimis state aid. This means it will contribute to the total aid you are allowed to get under the relevant de minimis state aid cap in the appropriate 3 year period.

If you engage in economic activity

De minimis state aid rules apply if your business engages in economic activity (providing goods or services).

You do not have to make a profit. If others in the market offer the same goods or services, it is still an economic activity and de minimis state aid rules will apply. So de minimis state aid will apply to most businesses claiming the EA.

If your business falls into de minimis state aid rules

You’ll need to make sure that you have space under your business sector ceiling (explained below) to get the full amount of EA available.

When you may not fall into de minimis state rules

You’ll not fall under the de minimis state aid rules if you do not engage in economic activity, for example, if you:

run a charity
employ someone to provide personal care.

However, you may still be eligible to claim EA.

Check other de minimis state aid you get

You’ll need to look at other de minimis state aid you got in the claim year and the previous 2 tax years. This is the relevant 3-year period.

Most businesses will not have received de minimis state aid before so will not need to do further checks to check if they are eligible for the EA.

How de minimis state aid and the relevant threshold are worked out

De minimis state aid and the relevant thresholds are worked out in euros. You should have been told in writing if other aid you have received was de minimis state aid. The letter should also tell you how much you got.

If an individual or business, has not received this notification but believe it is de minimis state aid or wish to check, they should contact the administrator of that scheme.

If not you should convert other aid you have received, and the full amount of EA for the claim year into euros using the exchange rate for April of the relevant year. You can then be sure you do not exceed the relevant de minimis state aid ceiling.

Check the exchange rates you need. You need to make de minimis state aid calculations starting from tax years 2020 to 2021.

State aid ceilings

The table shows the de minimis state aid ceilings for the relevant 3-year period. These are set by the European Commission.

Business sector	Ceiling
Primary production of agriculture products	€20,000
Fisheries and aquaculture sector	€30,000
Road freight transport sector	€100,000
Other, industrial (everyone else)	€200,000

Free, confidential, no obligation meeting with a Chartered Management Accountant- to find out more about how the Employment Allowance works, please do not hesitate to contact us.

Marriage Tax Allowance

If you’re married, you may be entitled to receive £1,150 from HMRC! Over 2.4 million qualifying couples miss out on this – check below to see if you are eligible.

This works by allowing you to transfer £1,250 of your personal allowance (the amount you can earn tax-free each tax year) to your spouse, if they’re a basic rate taxpayer.
Eligibility:

One of you must be a basic-rate taxpayer (earn less than £50,000/year) and the other a non-taxpayer (earn less than £12,500/year).
You must be married or in a civil partnership.
You both must be born after 6 April 1935.

These are the maximum amounts you could receive for each tax year:

2015/2016 – £212 (deadline 5 April 2020)
2016/2017 – £220
2017/2018 – £230
2018/2019 – £238
2019/2020 – £250

Deadline: Time is running out to claim the marriage tax allowance for 2015/16.

To benefit from claiming for the last 4 years, you must apply before the 5th of April 2020 to potentially receive the full £1,150.

Do It Yourself!

Applying for the marriage tax allowance is simple and most importantly FREE. We advise that you only apply through the HMRC website to avoid paying unnecessary fees. However, if your accountants do your tax return for you, they can also do this for you.

How to apply:

Use the following link to apply. The application is to be done by the non-taxpayer. https://www.gov.uk/apply-marriage-allowance

Free confidential, no obligation meeting with a Chartered Management Accountant- to find out how the Marriage Tax Allowance works, or for your own business, please do not hesitate to contact us.