More money for Tourism
Two new funding packages worth £15 million will support the tourism sector as it continues to feel the impacts of the coronavirus (COVID-19) pandemic. More details here.
Support for Museums and Galleries
The £4 million Museums Resilience and Recovery Fund is intended to provide some support for Scotland’s museums and galleries and will be administered by Museums Galleries Scotland. More details here.
Support for Events Sector
A funding package of £10 million has been established to help the events sector recover from the coronavirus (COVID-19) pandemic. More details here.
Eat Out Scheme
This took off this week and seems to have been very successful so far. If you own a bar, restaurant or other eatery and are still not sure what you need to do, you can register for a live webinar TOMORROW here. You can also watch a video that explains more about what's required to take part, here.
Licensed Waste Management Facility Support
If you are a licensed waste management facility operating in Scotland, support is now available to assist with the COVID-19 recovery. You can apply for up to £10k to make adaptations required for social distancing on your premises.
As Scotland progresses through changes in the various phased restrictions put in place around COVID-19, this grant fund will support eligible businesses in implementing control measures that will allow operational capacity to recover in line with recommended practices.
Who can apply?
This funding programme is open to operators of licensed waste management facilities in Scotland involved in the management, recycling or reprocessing of recyclate working with household, commercial and industrial, and construction wastes.
How to apply
The application form and guidance notes are available for download from this page. Completed applications should be submitted to this email address (to where you can also send any questions) no later than noon on the 21st of August 2020.
REMEMBER - Self Assessment taxpayers can automatically defer their July payment on account
Ordinarily, the second Self Assessment payment on account for 2019 to 2020 is due at the end of July. However, with the coronavirus crisis, anyone who has difficulty paying this on account can automatically defer the payment until 31 January 2021.
To make this as easy as possible, customers do not need to contact HMRC to defer their payment on account - they opt into the deferral by simply not paying their tax bill due by 31 July 2020.
If no payment is received, HMRC will automatically update their systems to show payment has been deferred and no interest or penalties will be incurred, providing it is paid in full by 31 January 2021.
The only action customers may need to take is to cancel their direct debit if they have one set up for their payments on account.
Self Assessment taxpayers should think carefully about whether deferral is right for them. It’s important to remember that the deferred amount will be due on 31 January 2021, the same date that any 2019 to 2020 balancing payment and first 2020 to 2021 payment on account will be due. This could mean 3 separate payments are due all at once.
You may wish to contact HMRC about paying these combined amounts in instalments if you have difficulty in paying them in full at once.
Normally, each payment on account is estimated, based on 50% of the previous year’s Self Assessment tax bill and they are advance payments towards the current year’s tax bill. This means that in normal circumstances, payments on account are payable by Self Assessment taxpayers by 31 January and 31 July each year, unless:
· their last Self Assessment tax bill was less than £1,000
· they have already paid more than 80% of all the tax they owe at source, for example through their tax code. For more information, see this link.
If you want any advice on this, remember that M&S are TAX SPECIALISTS, so please do give us a call.
Two more updates - for the agricultural community
Helping Farmers Diversify into forestry
Farmers and crofters are being offered £1 million in funding to diversify into forestry and help with the fight against climate change.
The money is the first batch of funding from the Agriculture Transformation Programme, a key Programme for Government commitment that aims to support the agriculture sector in helping Scotland meet its greenhouse gas emissions targets.
It comes on top of £500,000 announced last week by Scottish Forestry to assist farmers and crofters in buying forestry and timber processing equipment.
The funding will help farmers and crofters to establish new small-scale woodlands, giving them a valuable new source of income.
“This funding will also be a boost to the wider rural economy during our recovery from the coronavirus (COVID-19) pandemic).”
Grants from the new £1 million fund cover up to 90% of the cost of establishing woodlands.
The £500,000 fund was announced on 10 July as part of the Harvesting and Processing grants package and will cover up to 40% of the cost to small farmers and crofters of buying forestry and timber processing equipment or buildings.
Both grant schemes will be managed by Scottish Forestry. More information is available on the Scottish Forestry website
Agriculture loan scheme launches
A loan scheme to support farmers and crofters through the coronavirus (COVID-19) crisis has been announced by Rural Economy Secretary Fergus Ewing.
With the additional uncertainty caused by Brexit, the National Basic Payment Support Scheme will maintain vital cash flow for farm and croft businesses by injecting up to £340 million into the rural economy.
The scheme will give farmers and crofters access to vital financial support up to three months earlier than the EU CAP payment period, helping them continue to operate during the crisis.
The loan scheme provides Scottish farmers and crofters access of up to 95% of their 2020 CAP BPS and Greening payment, restricted to the scheme maximum of £133,638. Loan offer letters will be sent to eligible farmers and crofters from the beginning of August, with the first payments due in September.
Three more updates -
£100 million for employment support and training
People looking for work or those at risk of redundancy will benefit from additional assistance to move into work or retrain.
The package of support, outlined by Economy Secretary Fiona Hyslop, is backed by £100 million for 2020/21, with at least £50 million of that funding set aside to help young people get into work.
The measures include a job guarantee for young people, a new national retraining scheme, and more funding to provide immediate assistance and advice if people are made redundant.
In addition, Fair Start Scotland, the employment support service, has been extended by a further two years to March 2023.
The £100 million is in addition to the £33 million already committed for employability support for 2020/21.
Extension to Fair Start Scotland
This has been extended to the 31st of March 2023 to provide stability and continuity as the country responds to the current Covid-19 crisis and moves into the economic restart and recovery phases. More details are available at this link.
Grant funding to support infrastructure adaptations in response to COVID-19
This grant fund will support eligible businesses in implementing control measures that will allow operational capacity to recover in line with recommended practices. More details of who can apply and how to apply at this link.
Two more updates - hospitality VAT and Support for childcare sector
Hospitality sector reduction in VAT rate
As a consequence of the temporary reduction in the VAT rate from 20% to 5% in the hospitality sector, the flat rate percentages used for catering (including restaurants and takeaways), accommodation and pubs have also been reduced from 15 July to 12 January 2021.
Updated Government guidance confirms the new rates as:
• Catering services including restaurants and takeaways: flat rate from 15 July 2020 to 12 January 2021 – 4.5%; flat rate up to 14 July 2020 and from 13 January 2021 – 12.5%;
• Hotel or accommodation: flat rate from 15 July 2020 to 12 January 2021 – 0%; flat rate up to 14 July 2020 and from 13 January 2021 – 10.5%
• Pubs: flat rate from 15 July 2020 to 12 January 2021 – 1%; flat rate up to 14 July 2020 and from 13 January 2021 – 6.5%.
For further details, see the Government guidance VAT Flat Rate Scheme
Support for childcare sector
Funding of £11.2m is being made available to support childcare providers with the cost of safely reopening.
The new Transitional Support Fund will help childcare providers in the private and third sectors, including out-of-school care providers, meet extra costs incurred to comply with public health guidance in response to the coronavirus (COVID-19) pandemic.
The grants are expected to help with costs for:
· increased cleaning
· investment in additional equipment and developing outdoor space to enable more outdoor learning
· adaptations to support the physical distancing of adults, such as changes to entrance and exit areas and additional signage.
More information as to how providers can access the Transitional Support Fund will be available by 31 July.
Grants will be available to all private and third sector childcare providers, not just those delivering funded early learning and childcare.
Grant amounts will vary according to the size of the childcare setting and will be based on Care Inspectorate registered capacity.
Two updates for Retail and Hospitality in particular
The Eat out to Help Scheme
HMRC has published guidance for businesses wishing to register and use the Eat Out to Help Out Scheme which enables them to offer a discount to diners from 3 August 2020. The scheme can be used:
• all day, every Monday, Tuesday and Wednesday from 3 to 31 August 2020
• to offer a 50% discount, up to a maximum of £10 per person, to diners for food and non-alcoholic drinks to eat or drink in
• to claim the money back from the government
There is no limit to the number of times customers can use the offer during the period of the scheme. Registration will close on 31 August.
You can register if your establishment:
* Sells food for immediate consumption on the premises
* Provides its own dining area or shares a dining area
* Was registered as a food business with the relevant local authority on or before 7 July
You cannot register:
* An establishment that only offers takeaway food or drink
* Catering services for private functions
* A hotel that provides room service only
* Dining services (such as packaged dinner cruises)
* Mobile food vans or trailers
You can register for the scheme here. To register for the scheme you must have:
* The Government Gateway ID and password for your business
* The name and address or each establishment to be registered
* The UK bank account number and sort code for the business
* The address on your bank account for the business
* The date your business started trading
You may also need you:
* VAT registration number
* Employer PAYE scheme reference number
* Corporation Tax, Self Assessment UTR
You will be registered instantly and will received a registration reference number which you will need to make you claim. You can download promotional material to help your business market the scheme.
Offering the discount
If you include a service charge on your bill it cannot be included in the scheme discount
You can use the scheme alongside any other discounts to diners, but you must then apply those discounts first to calculate your claim.
You cannot change the terms of the scheme, the discount you offer must be 50%
A diner is any person, adult or child for whom food or drink is being purchased for consumption on premises. A diner does not need to be the paying customer
Where there is more than one diner on a single bill, the cap does not need to be calculated for each individual diner based on their specific orders. Instead, the discount that is applied to the overall bill should be capped at the number of diners multiplied by £10. For example, a family of four have a bill of £60 which includes £10 alcohol. A claim can only be made on £50 which is a spend of £12.50 each which is below the £20 maximum spend limit. The discount of 50% can only be applied to the £50 therefore discount is £25 and bill to the customer is £35 being £60 bill less £25 discount. As a further example the same family of four spend £100 which includes £10 alcohol. They have spent over the maximum £20 under the scheme on food and non-alcoholic drinks and therefore the claim is capped at £40 (4 diners x £10).
Further guidance about the scheme is available here
VAT reduced rate for hospitality, holiday accommodation and attractions
The government made an announcement on 8 July 2020 allowing VAT registered businesses to apply a temporary 5% reduced rate of VAT to certain supplies relating to:
· hotel and holiday accommodation
· admissions to certain attractions
The temporary reduced rate will apply to supplies that are made between 15 July 2020 and 12 January 2021.
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%.
You will also be able to charge the reduced rate of VAT on your supplies of hot takeaway food and hot takeaway non-alcoholic drinks.
More information about how these changes apply to your business can be found in Catering, takeaway food (VAT Notice 709/1)
Hotel and holiday accommodation
You will also benefit from the temporary reduced rate if you:
· supply sleeping accommodation in a hotel or similar establishment
· make certain supplies of holiday accommodation
· charge fees for caravan pitches and associated facilities
· charge fees for tent pitches or camping facilities
More information about how these changes apply to your business can be found in Hotels and holiday accommodation (VAT Notice 709/3)
Admission to certain attractions
If you charge a fee for admission to certain attractions where the supplies are currently standard rated, you will only need to charge the reduced rate of VAT between 15 July 2020 and 12 January 2021.
However, if the fee you charge for admission is currently exempt that will take precedence and your supplies will not qualify for the reduced rate.
More information about how these changes apply to your business can be found in VAT: Admission charges to attractions
The Flat Rate Scheme
If you are a small business and use the use the Flat Rate Scheme to simplify your VAT calculations you should be aware that certain percentages have been reduced in line with the introduction of the temporary reduced rate of VAT. The most relevant categories will be:
* Catering services including restaurants and takeaways – new rate of 4.5% from 15 July (12.5% to 14 July)
* Hotels and accommodations – new rate of 0% from 15 July (10.5% to 14 July)
* Pubs – new rate 1% from 15 July (6.5% to 14 July)
More information can be found in VAT Flat Rate Scheme
The Tour Operators Margin Scheme
If you are a business that buys in and resells travel, accommodation and certain other services, and you act in your own name, you may operate the Tour Operators Margin Scheme to simplify your calculations.
Further information about how the introduction of the temporary reduced rate of VAT will affect your calculations can be found in Tour Operators Margin Scheme (VAT Notice 709/5)
Accounting for supplies that straddle the temporary reduced rate
In most cases, you will simply account for VAT at 5% for supplies made between 15 July 2020 and 12 January 2021. However, there may be situations where you receive payments or issue invoices before 15 July 2020 for supplies that take place on or after 15 July 2020.
More information about this can be found in sections 30.7.4 to 30.9.2 of VAT guide (VAT Notice 700)
The Chancellor's Statement - Key points (analysis to follow later)
Self-employed Income Support Scheme: update
There is a much longer news article about this from Chris Leslie, our tax senior, on the news pages of our website. Given that HMRC's definition of what constitutes being 'adversely affected' by the coronavirus is not always clear, this is well worth a read. Go to this link for Chris's article.
SUMMARY OF SOME OF THE KEY DATES YOU NEED TO BE AWARE OF ...
1 July 2020
* Revised furlough scheme (CJRS v 2) now in effect, but only for employees who have already completed a 21-day period on furlough. It is also restricted to employers who have already claimed for employees under CJRS v 1. There is a cap on the number of employees who can be included in a CJRS v 2 claim equal to the maximum number included in a CJRS v 1 claim by that employer.
* The CJRS v2 will cover 80% of the employee's wages for periods on furlough, plus the employer's NIC and employer's minimum pension contributions due in respect of those wages.
6 July 2020
* Forms P11D and P11D(b) for 2019/20 must be submitted to HMRC, with a copy supplied to employees.
13 July 2020
* Applications for the first Self-employed Income Support Scheme (SEISS v 1) grant must be submitted to HMRC by this date.
14 July 2020
* Second SEISS grant (SEISS v2) requires claimants to confirm that their business was adversely affected by the coronavirus on or after this date. Claims portal for SEISS v2 to open in August.
31 July 2020
* CJRS v1 claims for furlough periods up to and including 30 June 2020 must be submitted to HMRC by this date.
* The 2019/20 second self-assessment payment on account (POA) of income tax and Class 4 NIC is normally due by this date, but all such payments are automatically deferred. Taxpayers may pay the tax and NIC due by this date if they wish. If the tax is deferred it must be paid by 31 January 2021.
1 August 2020
* Employees should continue to receive 80% of their usual wages, up to £2,500 per month, for periods when they are furloughed, funded by the CJRS v2. However, employers must pay the employer's class 1 NIC and the employer's minimum pension contributions into a workplace pension in respect of all wages including furlough wages. Employers must report for each employee on furlough the hours worked and the employee's "usual hours".
* VAT: temporary zero rate reverts to the standard rate for PPE purchased on or after this date.
31 August 2020
* Furlough periods for August must come to an end.
1 September 2020
* Employees should receive 80% of their usual wages for periods on furlough, but the CJRS v 2 will only fund 70% of the usual wages up to £2187.50 per month. Employers must pay the employer's class 1 NIC and the employer's minimum workplace pension contributions in respect of all wages paid to the employee including furlough wages.
30 September 2020
* Furloughed periods for September 2020 come to an end.
1 October 2020
* Employees continue to receive 80% of their usual wages for periods on furlough, but the CJRS v 2 will only fund 60% of the usual wages up to £1,875 per month. Employers must pay the employer's class 1 NIC and the employer's minimum workplace pension contributions in respect of all wages paid to the employees, including furlough wages.
31 October 2020
* All furlough periods must end for all employees.
30 November 2020
* All CJRS v2 claims for furloughed employees must be submitted to HMRC by this date.
31 January 2021
* Electronic self-assessment 2019/20 personal tax returns, and any tax returns excluded from online filing for 2019/20, must be filed by this date.
* All outstanding self-assessment income tax and class 4 NIC for 2019/ including the POA deferred from 31 July 2020, must be paid. The first POA for 2020/21 must also be paid by this date, calculated as half the 2019/20 liability. Any capital gains tax due for 2019/20 must be paid, or topped-up where a payment on account has already be paid in respect of a residential property disposal.
1 March 2021
* Domestic reverse charge for VAT relating to certain construction services comes into effect. The commencement was postponed from 1 October 2020 due to the coronavirus pandemic.
31 March 2021
* VAT deferred from March to June 2020 must be paid by this date.
HMRC publishes guidance on paying back CJRS grants
Famously, the Spectator magazine has paid back all of the money it received from the taxpayer for furloughing staff. If you are similarly honest, HMRC has published guidance explaining how employers can pay all or some of over-claimed grants back through the coronavirus job retention scheme (CJRS).
This can be found at Pay Coronavirus Job Retention Scheme grants back.
National Lottery Heritage Emergency funding extended
The National Lottery Heritage Fund quickly launched a lifeline £50million fund which has been helping organisations across the country navigate the many challenges they are facing. The criteria for that fund has now been expanded to help heritage organisations safely reopen in line with the Scottish Government's new guidelines.
The application deadline has also been extended to Friday 31 July 2020.
The Heritage Emergency Fund offers grants of between £3,000- £250,000 to organisations which have received National Lottery Heritage funding in the past.
Applications are open to the full breadth of heritage, from historic sites, industrial and maritime heritage, museums, libraries and archives to parks and gardens and landscapes and nature.
The extended criteria will support organisations with reopening and recovery costs associated with the coronavirus (COVID-19) pandemic. This could include strategic reviews of business models, operating plans and business plans, or investment to enable digital delivery of services. It can also be used to help manage heritage sites while following social distancing guidelines, for example:
* additional staff to help manage queues
* Personal Protective Equipment (PPE) for staff and volunteers
* additional cleaning
* implementing contactless payment methods
* temporary structures to help manage visitors such as shelter for queues or additional toilets
The Heritage Emergency Fund has been made possible thanks to money raised by National Lottery players.
Six rules you need to know about the flexible furlough system
Here are the rules employers and employees need to know to access the government's flexible furlough scheme that launched yesterday, on 1 July:
1. Who can go on flexible furlough?
From 1 July 2020 only employees that employers successfully claimed a previous government grant for will be eligible for more grants under the Job Retention Scheme.
This means they must have previously been furloughed for at least three consecutive weeks taking place any time between 1 March and 30 June 2020.
2. How do I put someone on flexible furlough?
Employers should discuss with employees who they wish to place on the flexible furlough scheme, outlining which hours they will be expected to work. Staff will need to agree on the arrangements of their part-time work.
This agreement should be confirmed in writing and a written record kept of it for five years.
3. How long must flexible furlough last?
Previously, staff needed to be furloughed for at least three weeks to benefit from the scheme. However, flexible furlough agreements can last any amount of time.
That said, the period that employers claim for must be for a minimum period of seven calendar days. Employees can enter into a flexible furlough agreement more than once.
4. How much can I claim?
The scheme will allow employers to recover the remainder of wages to a maximum cap. Wage caps are proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours.
The amount that the scheme will cover will begin to decrease from September 2020, and employers will be responsible for all of the national insurance and pension contributions from August 2020, regardless of the employee being on flexible furlough.
5. What records should I keep?
Employers will need to keep records of how many hours their employees work and the number of hours they are furloughed during flexible furlough.
6. How do I calculate working hours?
There are two different calculations employers can use to work out their employees' usual hours, depending on whether they work fixed or variable hours.
Where the employee's working hours are fixed, or their pay does not vary with the number of hours worked, the reference period for calculating their hours is the hours your they were contracted for at the end of the last pay period ending on or before 19 March 2020.
Where an employee works variable hours, employers will use the higher of:
* the average number of hours worked in the tax year 2019 to 2020; and
* the corresponding calendar period in the tax year 2019 to 2020.
Tax credits renewals deadline approaches
HMRC are reminding tax credits customers that they need to tell HMRC about any changes in their circumstances or income by 31 July 2020.
For further information, see the HMRC press release (Tax credits: it's time to update your award) which is available at this link.
Scottish Bed and Breakfast Hardship Fund
This fund is to provide hardship relief to B&B's and other small serviced accommodation businesses who don't have a business bank account and have not been able to access support through other schemes. Successful applicants will receive a one off payment of £3,000.
Businesses applying to this fund must operate with a personal bank account that demonstrates business revenue and expenditure (rather than a business bank account).
More information about the fund and criteria for Fife can be found here.
Deferral of VAT to stop very soon!
The VAT payment deferral period ends on 30 June 2020. This means you'll need to:
* set-up cancelled direct debits in enough time for HMRC to take payment (May quarter due 7 July)
* submit VAT returns as normal, and on time
* pay the VAT in full on payments due after 30 June
Any VAT payments you have deferred between 20 March and 30 June should be paid in full on or before 31 March 2021.
* if you are unable to pay the VAT due and may need more time, go to this link: <https://www.gov.uk/difficulties-paying-hmrc> as soon as possible and before the payment is due.
Self-Employment Grant – Don’t miss out!
Following the government’s announcement of a second grant payment for the Self-Employed, a deadline has been placed on claiming the first grant payment. In order to receive this, individuals must make their claim on or before 13 July 2020 or they will miss out.
For anyone that has not yet made their claim, eligibility can be checked here: (https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#eligible)
and the claim itself can be made here:
Self-Employment Grant – New Parents
The government has announced an adjustment to the Self-Employed Income Support Scheme (SEISS) specifically for new parents.
Under this adjustment, new parents (including those who have adopted) who have taken time out of their trading to care for their children within the first 12 months of birth (or within 12 months of an adoption placement) will now be able to use either their 2017/18 or both their 2016/17 and 2017/18 self-assessment returns as the basis for their eligibility for the SEISS.
New parents will still need to meet the other standard eligibility criteria for support (which is to be set out at the start of July - we'll keep you posted).
Detailed Update Coronavirus Job Retention Scheme:
This update covers the changes taking place to the Coronavirus Job Retention Scheme (CJRS) on 1 July 2020. The revised measures mean that, in effect, these new arrangements constitute a new scheme. Employers therefore have until only 31 July 2020 to make any claims in respect of periods ending on or before 30 June 2020.
From 1 July, employers can only claim the CJRS grant in full or for those employees they bring back to work, where the employee has previously been furloughed for a minimum of three weeks up to 30 June. The employee will be able to work a flexible shift pattern and the employer will still be able to claim CJRS grant, though this will be limited to the employee’s normal hours not worked. The existing scheme will close to new employees on 30 June. Given that there is a minimum furlough period of 3 weeks, this means that the employee must have been on furlough from on or before 10 June to qualify.
The amount of the grant is being reduced from 1 July until the date the scheme will end, on 31 October as summarised here:
Furlough Wages Grant 80%
up to £2,500
80% up to £2,500
80% up to £2,500
70% up to £2,187.50
60% up to £1875
10% to make 80%
20% to make 80%
Employers National Insurance
Furlough minimum period
The employer continues to be responsible for paying staff in accordance with their contract of employment. There have been no changes to the rights afforded to employees under employment law and employers must agree with their employee any new flexible furloughing arrangement and confirm that agreement in writing. Payment of net wages, PAYE and NIC remain the responsibility of the employer.
Under the new scheme starting on 1 July:
Summer Support for Students in Scotland
Students facing hardship this summer due to COVID-19 can now receive financial support within a package of new measures.
The Scottish Government has brought forward early access to £11.4 million of discretionary funds - support for higher education students in financial difficulty – to be administered by colleges and universities.
Unlike continuing higher education students, most former further education students can receive benefits if they are unemployed. Colleges will now have flexibility to offer discretionary funds to bridge the timing gap between bursary payments ending in June and Universal Credit payments starting.
Scottish students studying in Europe as part of EU Portability or historically arranged schemes will be able to access a £100,000 emergency fund administered by the Student Awards Agency Scotland (SAAS).
SAAS has also suspended all new debt recovery actions in respect to grants and bursaries until September for students whose circumstances have changed and may have to return overpayments. Students are encouraged to contact SAAS to discuss what help is available.
Latest information and advice for students on COVID-19, including support for employment, is available at www.studentinformation.gov.scot.
For further information please visit :
Furlough available for staff returning from maternity leave
HM Treasury has announced that people on paternity and maternity leave who return to work in the coming months will be eligible for the Government's furlough scheme.
This extension will only apply where they work for an employer who has previously furloughed employees. More details and updated guidance are to be released on 12 June.
Further details on the announcement can be found at https://www.gov.uk/government/news/parents-returning-to-work-after-extended-leave-eligible-for-furlough.
Covid-19 business support grants extended to more firms as closing date for applications is announced
The Scottish Government has announced that small businesses which share properties but do not pay business rates are now eligible to apply for grants to help with the impact of Covid-19.
The extension to the Small Business Grant Fund will apply to firms occupying shared office spaces, business incubators or shared industrial units and who lease the space from a registered, rate-paying landlord. Separately, eligibility has also been extended to companies occupying multiple premises with a cumulative value of more than £51,000.
From 8 June 2020, eligible businesses will be able to apply to their local authority for grants of up to £10,000.
Further details can be found at https://news.gov.scot/news/more-support-for-small-business.
The various schemes have paid out nearly £825m so far, with over 72000 businesses receiving some financial support. Fife has had the 4th highest number of awards in the country, with over £46 million paid out.
The Scottish Government has announced that these schemes will close to new applications on 10 July, so businesses who have yet to apply are urged to do so quickly.
Covid-19: delay to VAT reverse charge on construction services
HMRC has announced a five-month delay to the introduction of the domestic reverse charge for construction services, due to the impact of the coronavirus pandemic on the construction sector, and the VAT change will not now apply until 1 March 2021
The new rules mark a complete overhaul of the way VAT is payable on building and construction invoices, as part of moves to reduce fraud in the sector. Under the domestic reverse charge the customer receiving the service will have to pay the VAT owed straight to HMRC instead of paying the supplier if they report under the Construction Industry Scheme (CIS).
The change was originally scheduled to come into effect from 1 October 2019, but was then deferred for 12 months, after industry bodies and accounting specialists highlighted concerns about lack of preparation and the impact on businesses.
Now the start date has been put back from 1 October 2020 to 1 March 2021.
There will also be an amendment to the original legislation, which was laid in April 2019, to make it a requirement that for businesses to be excluded from the reverse charge because they are end users or intermediary suppliers, they must inform their sub-contractors in writing that they are end users or intermediary suppliers.
HMRC says the additional amendment is designed to make sure both parties are clear whether the supply is excluded from the reverse charge.
It reflects recommended advice published in HMRC guidance and brings certainty for sub-contractors as to the correct treatment for their supplies.
If followed, it will remove a concern that HMRC may seek to challenge the reverse charge treatment where a business that qualified as an end user or intermediary supplier had not given any notification of their status.
In the intervening period before the change comes in, HMRC says it will continue to focus additional resource on identifying and tackling existing perpetrators of fraud in the construction supply chain. It will also work closely with the sector to raise awareness and provide additional guidance and support to make sure all businesses will be ready for the new implementation date.
Important update re furlough scheme...
On 29 May 2020, changes were announced to the scheme which are designed to wind it down before complete closure in October 2020. It will be closed to new entrants from 30 June 2020. From this date on, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June. This means that any new employees to be furloughed must be done before 10 June 2020 due to the closure of the scheme to new entrants.
Getting back to work. Advice from Scottish Enterprise on how to thrive in the post-Covid world
There is some useful information and plenty of good ideas in this update from Scottish Enterprise. It's too long to publish in full here, but you can access the link to the article here.
Self-Employment Income Support Scheme – Additional Payment
Following the announcement of the extension of the scheme available for furloughed employees, the government has also released plans for a second and final grant for those under the Self-Employment Income Support Scheme (SEISS). This will be paid out in August to cover the period June to August 2020.
However instead of the previous 80% of average monthly trading profits, the grant will now be based on 70% (capped at £6,570 for the total payment).
Although it is welcomed that support for the self-employed will continue, it is disappointing that the scheme only covers up until August, when the furlough scheme available for employees runs through until October. It is hoped that the government will review this position again after the August grants have been paid, as there will no doubt be a large number of self-employed individuals needing further support as their businesses will still not have been able to re-open or can only do so with severe restrictions in place.
Changes to the Coronavirus Job Retention Scheme (CJRS)
As restrictions are starting to be eased across the UK, and a return to work is now on the horizon for many employees, the UK government have announced plans for how the CJRS will wind down over the next few months. This is made up of 3 key changes to the current version of the CJRS:
Closing to New Entrants
The CJRS will close to new entrants from 30 June, with any employees that have not been furloughed for a full 3-week period prior to this, being ineligible to receive support. This means that the final date that an employee can be furloughed from is Wednesday 10 June.
It is therefore strongly recommended that any employer reviews their staffing position ahead of this deadline.
In a welcomed change, from 1 July, employers will have the option to bring previously furloughed employees back to work part time.
The CJRS will cover 80% of wages for any of an employee’s normal hours that they do not work (subject to the changes below), with the employer paying the wages for the hours that an employee does work. The number of hours the employee does work is at the discretion of the employer, and there is no minimum hour’s requirement. However, any arrangements must cover at least one week and be confirmed to the employee in writing.
When claiming their grant, employers will be required to submit data based on the usual hours an employee would be expected to work and their actual hours. For salaried employees working part time, this should make reporting and calculating the grant relatively simple as this will be based on the contracted hours. However, it is not clear at this point how the grant will be calculated for employees that have variable hours.
Although furloughed employees will continue to receive 80% of their wages (up to a cap of £2,500), from 1 August a portion of this cost will be passed on to employers by the reduction of the grant. The timetable for this is:
Covered by Grant
Paid By Employer
80% of wages up to a cap of £2,500
Employers NIC and pension contributions
70% of wages up to a cap of £2,187.50
10% of wages to make up to 80%
Employers NIC and pension contributions
60% of wages up to a cap of £1,875
20% of wages to make up to 80%
Employers NIC and pension contributions
It is important to note that the furlough grant will only relate to hours not worked by the employee, and the cap will also be proportional to this.
There will be more guidance on how the flexible working arrangements will operate on 12 June.
Other than the phasing out of the contributions, the other key changes to note are the ability to work part-time and that no NEW employees will be permitted to be furloughed from 10 June.
Help with mortgages to continue for homeowners affected by coronavirus
Homeowners struggling to pay their mortgage due to Coronavirus will be able to extend their mortgage payment holiday for a further three months, or start making reduced payments, in proposals published today. More details here.
Scottish Government issues guidance for manufacturers and retailers ahead of re-start.
Click here to read more
The Scottish Government - Coronavirus: framework for decision-making, Scotland's route map through and out of the crisis.
This is a long read, but necessary if you want to know what is being proposed, although we note that, understandably, the timings are all dependent on the progression of the virus and our efforts to overcome it. Click here for details.
HMRC have made amendments to their guidance covering the Coronavirus Job Retention Scheme (CJRS).
The amendments (with active links) are as follows:
If you are unsure of anything, please don’t hesitate to contact us for advice.
The coronavirus SSP rebate scheme: open from 26th May
The coronavirus SSP rebate scheme, announced by Chancellor Rishi Sunak at the Budget officially opened for applications from 26th May.
The scheme allows small and medium sized employers, with fewer than 250 members of staff, to apply to recover the costs of paying coronavirus-related SSP, and is worth nearly £200 per employee.
To get the rebate, employers need to go online via gov.uk and input simple information on the employees being claimed for. After making an application, HMRC says they should receive the money within six working days.
The scheme covers all types of employment contracts, including full-time employees, part-time employees, employees on agency contracts, and employees on flexible or zero-hour contracts.
Tax agents can make claims on behalf of employers.
Connected companies and charities can also use the scheme if their total combined number of PAYE employees are fewer than 250 on or before 28 February 2020.
Employees do not have to provide a doctor’s fit note in order for their employer to make a claim under the scheme make a claim.
However, employers can ask them to provide either an isolation note from NHS 11 if they are self-isolating and cannot work because of coronavirus, or the NHS or GP letter telling them to stay at home for at least 12 weeks because they’re at high risk of severe illness from coronavirus.
The repayment will cover up to two weeks of SSP from either 13 March 2020, if an employee had coronavirus, symptoms or is self isolating because someone they live with has symptoms, or from 16 April 2020 if an employee was shielding because of coronavirus.
Employers can furlough their employees who have been advised to shield in line with public health guidance and are unable to work from home, under the coronavirus job retention scheme. Once furloughed, the employee should no longer receive SSP and would be classified as a furloughed employee.
Where an employee has been notified to shield and has not been furloughed, the rebate will compensate up to 2 weeks of SSP from 16 April.
The current rate of SSP is £95.85 per week. Employers can choose to pay more than the statutory minimum, but will only be able to reclaim the SSP rate.
COVID-19 support, Dentists' non-NHS work
HMRC have confirmed that overall as long as they meet the criteria for the Coronavirus Job Retention Scheme (CJRS) and the Self-employment Income Support Scheme (SEISS), dentists can claim on the basis that they have income from non-NHS work.
The implications of this notice is that this will apply in Scotland. We are checking this and will report ASAP. The anticipation is that the schemes will operate in a broadly similar way.
The Scottish Government has today (21 May) published COVID-19 Framework for Decision Making - Scotland's route map through and out of the crisis.
Read more here.
Specified Adult Childcare credits
If you are a grandparent, or other family member, who cares for a child under 12, usually whilst their parent (or main carer) is working then you may be able to claim Specified Adult Childcare credits.
Since March 2020, your normal caring arrangements may have been affected by coronavirus (COVID-19). If you have provided care in a different way, for example over the telephone or video, you can still apply for NI credits for the financial years 2019 to 2020 and 2020 to 2021.
Specified Adult Childcare credits work by transferring the NI credit attached to Child Benefit from the Child Benefit recipient to a family member who is providing care for a related child under 12. Therefore, if no one has claimed Child Benefit for the child there is no attached NI credit to transfer and Specified Adult Care credits cannot be awarded.
View the guidance at https://www.gov.uk/government/publications/national-insurance-credits-for-adults-who-care-for-a-child-under-12-fact-sheet.
Holiday entitlement and pay during the coronavirus crisis.
Just in case you missed this, the government has published an explanation of how holiday entitlement and pay operate during the coronavirus pandemic, where it differs from the standard is separate guidance for Northern Ireland.
The actual guidance is quite lengthy, but well worth reading. You can access it here:
Coronavirus guidance for Companies House customers, employees and suppliers.
This is useful advice and guidance for anyone who has to communicate with Companies' House. Again, it's quite lengthy but you can read the full article on the .gov.uk website, here.
Coronavirus Statutory Sick Pay Rebate Scheme set to launch
Employers will be able to make claims through the Coronavirus Statutory Sick Pay Rebate Scheme from 26th May. More details here.
The Association of Certified Chartered Accountants (ACCA) reports that nearly two-thirds of firms may not be able to pay their tax. Make sure you are not one of them: ask us for advice if you are worried about this. More details on our news page.
Starting today, some of the self employed (sole traders) can begin to claim from the Income Support Scheme.
More details from the government site: here
Also, a reminder about the Bounce Back Loan Scheme.
The scheme helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.
The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.
If you need a larger loan, you may be entitled to other government support.
You can apply for a loan if your business:
Businesses from any sector can apply, except:
You cannot apply if you’re already claiming under:
If you’ve already received a loan of up to £50,000 under one of these schemes you can transfer it into the Bounce Back Loan scheme. You have until 4 November 2020 to arrange this 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.
There are 11 lenders participating in the scheme including many of the main retail banks. You should approach a suitable lender yourself via the lender’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’ll be responsible for repaying 100% of the amount borrowed.
If one lender turns you down, you can apply to other lenders in the scheme.
You may want to consider using a broker to find the right type of finance for your needs, or do your own research using the British Business Bank’s finance guide.
Coronavirus Job Retention Scheme to continue
In a boost to millions of jobs and businesses, Rishi Sunak said the furlough scheme would be extended by a further four months with workers continuing to receive 80% of their current salary.
From the start of August, furloughed workers will be able to return to work part-time with employers being asked to pay a percentage towards the salaries of their furloughed staff.
The employer payments will substitute the contribution the government is currently making, ensuring that staff continue to receive 80% of their salary, up to £2,500 a month.
More information here:
From our perspective at M&S, probably the most important factor is the indication that employees will be allowed to work as part of the process and that more details will follow by the end of the month.
Update on Pivotal Enterprise Resilience Fund and an update for the self-employed about claiming a grant
Self-Employment Grants Update
It will soon be possible for those eligible under the Self-Employment Income Support Scheme to claim their grants.
The service is due to be operational on Wednesday 13 May, although it will not be open to everyone at this stage. The grants will then be paid out by 25 May, or six working days after the claim is made.
HMRC are now starting to contact those eligible for the scheme by email, SMS or letter. However, if you would prefer to take the initiative , you can use HMRC’s online tool to confirm your eligibility and be told the date that you can make your claim. This can be found here https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#claim
Although no claims can be made yet, there are steps that can be taken to ensure that you will be ready to claim as soon as the system goes live. The most significant of these is that individuals must have their own HMRC Online Account. For individuals that use a tax adviser to deal with their returns, it may be that you do not have your own account and as advisers will be unable to make the claim on their behalf, this will need to be set up in advance. The link for setting up an account can be found by following the online tool within the link above and we would recommend that you not only check eligibility but also ensure you have your Government Gateway access in place to minimise the possibility of delays.
Note partners within a partnership will each need to make their own individual claim and set up their own HMRC Online Account.
It is hoped that this service will prove to be as successful as the furlough claim system has been so far.
The full amount of the grant received is taxable.
Pivotal Enterprise Resilience Fund, (originally posted on 30th April below...)
Scottish Enterprise and partners today advised that from 5pm on Tuesday 5 May 2020 the Pivotal Enterprise Resilience Fund will pause to allow detailed assessment of initial applications. More information here: https://www.scottish-enterprise-mediacentre.com/news/update-on-covid-19-business-grant-support
We have just got this information about the Scottish government's new scheme for helping more businesses. This covers creative, hospitality etc. plus the newly self-employed and also the Pivotal Enterprise Resilience Scheme. It puts some flesh on the bones of the report from the 21st April below. There is obviously quite a lot of work required in preparing your case for the PERF funding, so if you require any help please get in touch with us. There is quite a lot of reading here, so please scroll down till you find the relevant section for your business.
Bespoke, needs-based grant awards for Scottish SME firms that can demonstrate they are vulnerable but can present a strong business case for a viable future. Firms need to prove that they are vital to the local, regional or national economy.
The fund is to support these companies with working capital to help them continue trading or to come out of hibernation when the time is right.
Pivotal means different things in different regions and we will take that into account during the assessment. The application process will allow each applicant to make clear their contribution to the economy and their community. You may provide evidence of your unique status or links to key workers and key sectors such as food suppliers or how you are of integral importance to local communities.
Successful applicants will be able to provide evidence of, or demonstrate impact in, one or more of the following areas:
For the Pivotal Company Resilience Fund, applicants must provide:
Other important information for the Pivotal Company Resilience Fund:
Demonstrate that you are vital to the local, regional or national economy:
In this section of the application form, you should provide a brief outline of the wider contribution that your business makes to your local community or region of Scotland. As above, this could include benefits that extend to other businesses, local supply chains, associated employment and wider social and community benefits.
In addition, any benefits associated with increased R&D activity, innovation, export potential, increased productivity, diversity and equality, skills and training, supply chain opportunities and a net zero carbon economy could also be included.
This Fund is for small creative, tourism and hospitality companies that are experiencing hardship because they are ineligible for other COVID-19 Government grant support. The focus is to help companies manage cashflow commitment for the next three months, and those furloughing staff are still eligible to apply.
Grants of up to £25,000 can be accessed in addition to the Coronavirus Job Retention Scheme. However, those that have accessed other support will not be eligible. For example, if you already qualify for the retail hospitality and leisure £25,000 funding you would not be eligible.
For the Creative, Tourism and Hospitality Enterprises Hardship Fund companies must provide:
The grant is needs based. Successful applicants will be able to provide evidence of or demonstrate:
To allow us to check you are eligible for the funding you will be asked to provide one of the following:
You will be asked to provide your full-time equivalent (FTE) job numbers:
You will be asked to provide various pieces of financial information including your turnover figure from last year. You will be asked to complete a cash flow template and asked to upload your latest accounts that have been filed. You will also be asked for your latest management accounts that cover the period to date that are not covered by the latest accounts that have been filed.
For those applying for the Pivotal Enterprise Resilience Fund, this section should provide a brief outline of the wider contribution that your business makes to your local/region of Scotland.
This could include benefits that extend to other businesses, local supply chains, associated employment and wider social and community benefits.
In addition, any benefits associated with increased R&D activity, innovation, export potential, increased productivity, diversity and equality, skills and training, supply chain opportunities and a net zero carbon economy could also be included.
You will be asked if you are or are committed to becoming a Fair Work First employer. Fair Work First means investment in skills and training, no inappropriate use of zero hours contracts, action on gender pay, genuine workforce engagement, including with trade unions, and payment of the real Living Wage. The real Living Wage is currently £9.30 per hour and is based on the cost of living. More information can be found at https://scottishlivingwage.org/
You will be asked to confirm you are a Micro, Small or Medium Enterprise. The definition of these are set out below:
We can only accept one application per company or group if you have different branches, subsidiaries or parent bodies. If you are part of a group, to calculate the overall SME qualification you must combine the data (staff FTEs, turnover and balance sheet from last approved accounts) for each of the following:
For further guidance refer to the European Commission’s User Guide to the SME Definition.
Information on all grant awards will be published on the European Commission Competition database. Information on all grant payments over £25,000 will also be published on the Scottish Enterprise website. This is required to comply with our legal obligations.
Scottish Enterprise is subject to the Freedom of Information (Scotland) Act 2002 and may be obliged to release information about your application or grant award in response to any requests received.
Following the outbreak of the Coronavirus, the European Commission has approved schemes to aid businesses affected by the Coronavirus outbreak on the basis of their Temporary Framework, including the Covid-19 Temporary Framework measure for the UK. The maximum level of aid that a company may receive is €800 000 (€120,000 per undertaking active in the fishery and aquaculture sector or €100,000 per undertaking active in the primary production of agricultural products). This is across all UK measures under the terms of the European Commission’s Temporary Framework.
In your application you are required to declare any aid already approved under the Temporary Framework. The Euro equivalent of the Sterling aid amount is calculated using the Commission exchange rate applicable on the date the aid is offered. Daily rates can be found here.
Any aid provided under this measure will be relevant if you wish to apply, or have applied, for any other aid based on the European Commission’s Temporary Framework. You will need to declare this amount to any other aid awarding body who requests information from you on how much aid you have received. You must retain the award letter for four years after the conclusion of the UK’s transition from the EU and produce it on any request from the UK public authorities or the European Commission.
Aid may be granted to undertakings that were not in difficulty (within the meaning of Article 2(18) of the General Block Exemption Regulation on 31 December 2019, but that faced difficulties or entered in difficulty thereafter as a result of the Covid-19 outbreak. This aid is in addition to any aid that you may be have received under the De Minimis regulation allowing aid of up to €200,000 (€30,000 per undertaking active in the fishery and aquaculture sector or €20,000 per undertaking active in the primary production of agricultural products) to any one organisation over a three fiscal year period (i.e. your current fiscal year and previous two fiscal years), and any other approved aid you have received under other State aid rules, such as aid granted under the General Block Exemption Regulation.
In your application you will be asked to declare that on 31 December 2019, you did not meet any of the criteria to be considered an undertaking in difficulty.
2 (18) ‘undertaking in difficulty’ means an undertaking in respect of which at least one of the following circumstances occurs:
(a) In the case of a limited liability company (other than an SME that has been in existence for less than three years or, for the purposes of eligibility for risk finance aid, an SME within 7 years from its first commercial sale that qualifies for risk finance investments following due diligence by the selected financial intermediary), where more than half of its subscribed share capital has disappeared as a result of accumulated losses. This is the case when deduction of accumulated losses from reserves (and all other elements generally considered as part of the own funds of the company) leads to a negative cumulative amount that exceeds half of the subscribed share capital. For the purposes of this provision, ‘limited liability company’ refers in particular to the types of company mentioned in Annex I of Directive 2013/34/EU (1) and ‘share capital’ includes, where relevant, any share premium.
b) In the case of a company where at least some members have unlimited liability for the debt of the company (other than an SME that has been in existence for less than three years or, for the purposes of eligibility for risk finance aid, an SME within 7 years from its first commercial sale that qualifies for risk finance investments following due diligence by the selected financial intermediary), where more than half of its capital as shown in the company accounts has disappeared as a result of accumulated losses. For the purposes of this provision, ‘a company where at least some members have unlimited liability for the debt of the company’ refers in particular to the types of company mentioned in Annex II of Directive 2013/34/EU.
(c) Where the undertaking is subject to collective insolvency proceedings or fulfils the criteria under its domestic law for being placed in collective insolvency proceedings at the request of its creditors.
(d) Where the undertaking has received rescue aid and has not yet reimbursed the loan or terminated the guarantee or has received restructuring aid and is still subject to a restructuring plan.
This fund is designed for companies that are ineligible for other COVID-19 grant support or are not yet in receipt of the funds they need to survive.
You must meet these criteria in order to apply:
There is no cost to apply
This is for small Scottish creative, tourism and hospitality businesses who have experienced at least 50% loss of current or projected revenue as a result of COVID-19.
It will take up to 10 working days from application to appraisal and funds being released for approved applications.
Before you apply you must meet some criteria and have detailed information to hand. You will need to:
Your application will not be successful if you are applying on behalf of a non-supported sector: Gambling and betting activities, manufacture, repair or distribution of weapons and ammunition, manufacture, repair or distribution of military fighting vehicles
Then visit our partner site to start your application.
The volume of applications going through this site is extremely high and you may have difficulty getting through to the application form at the present time. You may wish to try later.
You need to apply in your Local Authority area. You may only apply to this fund once.
You will be asked to provide documentary evidence of your status and eligibility for the grant. Local authorities will then determine whether you meet the criteria, which has been set by the Scottish Government.
You will need to provide:
Successful applicants will receive a one-off payment of £2,000.
You must sign a declaration confirming that you meet all of the following criteria:
There is no cost to apply
Up to 10 working days from application to appraisal and funds being released for approved applications.
If you receive the grant you can continue to work or take on other employment including voluntary work.
You can apply direct through your local authority's website.
What do you need to provide to HMRC to make a claim via the Job Retention Scheme?
HMRC has published a step-by-step guide explaining the information that employers need to provide to HMRC to make a claim through the Coronavirus Job Retention Scheme (CJRS). It also describes the processes involved.
Government launches new coronavirus business support finder tool
A new ‘support finder’ tool will help businesses and self-employed people across the UK to quickly and easily determine what financial support is available to them during the coronavirus pandemic. We think it's actually pretty good: if you are unsure of what support you might be able to receive, you can access the tool here:
Scottish Government provides some more information on their additional scheme to help the self-employed.
When this was announced, the level of detail provided was slight and this update, while definitely giving us more information and also telling us these grants will be paid in May, still leaves many questions unanswered, not least:
Will Owner Managed Businesses (Ltd companies, especially SMEs) be covered?
Who decides what is a "pivotal" or "vital" business?
What constitutes a "creative" business?
Given that applications can be made by the end of April, it is optimistic to say that recipients will then be paid early in May? We hope not: many businesses need all the help they can get.
This is what the SG's website tells us:
"Support for the newly self-employed and firms suffering hardship to be paid in early May.
Economy Secretary Fiona Hyslop has confirmed that grant funding for the newly self-employed suffering hardship and SMEs in distress will be available in the coming days.
The £100 million fund to support the self-employed and SMEs announced last week will be broken into three separate funds as follows:
• £34 million Newly Self-Employed Hardship Fund, managed by Local Authorities, will be allocated to the newly self-employed facing hardship through £2,000 grants
• £20 million Creative, Tourism & Hospitality Enterprises Hardship Fund, managed by the Enterprise Agencies in partnership with Creative Scotland and VisitScotland for creative, tourism and hospitality companies not in receipt of business rates relief
• £45 million Pivotal Enterprise Resilience Fund, managed by the Enterprise Agencies for vulnerable SME firms who are vital to the local or national economic foundations of Scotland
The Scottish Government is also providing £1 million to top up Creative Scotland’s Bridging Bursaries in the not-for-profit sector.
Speaking in parliament, Ms Hyslop also confirmed that the grant funding will be open for applications by the end of April, and that recipients will receive funds in early May.
“This funding is intended to relieve the hardship of individuals and smaller firms that are ineligible for support from the UK Government or are not in receipt yet of the funds they need to survive.
“Our hospitality, tourism and creative sectors have been decimated by this crisis and previously profitable businesses have seen demand dry up overnight.
“However, because of the decisions the Scottish Government has taken, thousands more self-employed people and small businesses will be able to benefit from support compared with elsewhere, and we have been able to help sectors of the economy that are not being supported in other parts of the UK.
“As well as dealing with this immediate crisis, we must look to the future. We must ensure that those businesses with a part to play in strengthening resilience in Scotland’s economy survive this crisis and thrive in future, which is why £45 million is being allocated to those firms.
“We continue to engage with businesses on a regular basis to understand their needs and press the UK Government to deliver for them.”
The recently self-employed, who are excluded from the UK’s scheme but suffering hardship, will be able to receive £2,000 grants. For creative, tourism and hospitality companies of up to 50 employees not receiving business rates relief, there will be rapid access £3,000 hardship grants or larger grants up to £25,000 where it can be demonstrated support is needed. The support and larger grants for pivotal SME enterprises will depend on the specific need of the enterprise and be developed by the relevant enterprise agency with wraparound business advice and support."
ONCE WE HAVE MORE INFORMATION ON THE REAL DETAILS OF THIS WORTHWHILE INITIATIVE, WE'LL PUBLISH THEM HERE.
Furlough Start Date Extension
Originally, individuals had to be employed on 28 February 2020 in order to be eligible for the Coronavirus Job Retention Scheme, but in order to allow more individuals to benefit the date has been extended to 19 March 2020 (the day before the scheme was announced).
The new eligibility rules mean that employers can claim for furloughed employees that were employed and on their PAYE payroll on or before 19 March 2020. This means that the employee must have been notified to HMRC through an RTI submission notifying payment in respect of that employee on or before 19 March 2020.
This is a welcome change, that is expected to benefit over 200,000 employees that were previously expected to miss out, but we should caution that the reality is that we don't think this will benefit as many people as might be thought. The key aspect is that there must have been a submission to HMRC by 19 March. Most monthly-paid employees in March would have been paid after 19 March when the RTI submission referred to would have been made. This has been done to prevent abuse of the system but it will still almost certainly mean that lots of employees are excluded unless they are paid weekly or mid month.
Newly self employed support
The Scottish Government is launching a second phase of its business support package (see: https://news.gov.scot/news/additional-support-for-business) to help mitigate the impact of coronavirus.
A £100 million fund is being made available for newly self-employed people and viable micro and SME businesses in distress due to the coronavirus pandemic. It will open for applications by the end of April.
This aims to protect recently self-employed people and businesses who are ineligible for other Scottish Government or UK Government schemes.
On first reading perhaps a glimmer of hope here for Owner Managed Businesses, as it does say it will be extended to those who don’t already qualify for relief announced previously but equally we wouldn’t want to create false hope as the exclusion of OMBs from any financial support has been pretty emphatic up to just now. We’ ll continue to investigate and let you know as soon as the position becomes clearer.
Self-employed (Sole Trader, NOT Owner Managed Business) and wondering how much you might get from the government?
Here is the announcement from HMRC's website:
Find out how HMRC will work out your income and profits if you're self-employed or a member of a partnership in the UK and have lost profits due to coronavirus (COVID-19).
HMRC will assess your eligibility for the grant based on your total income and trading profits. This guide details how we do this.
You can use this guide to find out if you’re eligible and how much you may get.
We will use the figures on your tax returns for your total trading income (turnover), then deduct any allowable business expenses and capital expenditure.
Allowable expenses include:
It also includes:
We will not deduct from your trading profits:
If your total trading income (turnover) in each of the tax years 2016 to 2017, 2017 to 2018 and 2018 to 2019 was £20,000, and you claimed the £1,000 trading allowance each year.
This is worked out as:
Your average trading profit would be £19,000.
We will add together all profits and losses for all these trades to work out your trading profit.
If you only traded in the tax year 2018 to 2019, and made a £60,000 profit for your first trade, and then a £20,000 loss for your second trade, your trading profit for that year would be:
Trade 1 £60,000 profit deduct trade 2 £20,000 loss = £40,000
To work out your average trading profit we will add together all profits and losses for all tax years you’ve had continuous trade.
If you made:
Your average trading profit for the 3 tax years would be £30,000.
If you did not trade in tax year 2016 to 2017 but made:
Your average trading profit for the 2 tax years would be £35,000.
Your total income is the total of all your:
Your trading profits must be no more than £50,000 and more than half of your total income for either:
|2016 to 2017||2017 to 2018||2018 to 2019||Average for the 3 tax years|
|Trading profit are more than half of your total income||Yes||Yes||No||Yes|
So even if you made a loss in the tax year 2018 to 2019, you would still be eligible for the grant because your average trading profit for the 3 tax years:
Furloughed Employees – Calculating the Grant
With many employers having now identified which members of their staff are to be furloughed, the next question has become, what grant are they entitled to? The answer depends on whether the employee is salaried and received a regular wage, or whether there pay varies.
Salaried employees - The grant will be 80% of the employee’s regular wages up to the cap of £2,500.
Variable employees - The grant will be 80% of the higher of the following (again capped at £2,500):
Where a variable employee has not worked for 12 months and therefore the above rule cannot be applied, the claim should be based on 80% of their average monthly earnings since they started work.
Some examples of how this will apply in practice are set out below:
Salaried Employee – Example 1
Where an employee receives an annual salary of £24,000.
80% of salary
From the total grant, £1,600 is paid over to the employee and the balance is used to settle the employer’s NIC due on the furloughed wage.
Salaried Employee – Example 2
Where an employee receives an annual salary of £45,000.
80% of salary
From the total grant, £2,500 is paid over to the employee and the balance is used to settle the employer’s NIC due on the furloughed wage.
Variable Employee – Example 1
Where an employee has been employed for more than 12 months and received the following:
Higher salary out of above
80% of salary
From the total grant, £1,680 is paid over to the employee and the balance is used to settle the employer’s NIC due on the furloughed wage.
Variable Employee – Example 2
Where an employee started on 1 September 2019 and earned £15,400 up to 31 March 2020.
Average salary to date
80% of salary
From the total grant, £1,680 is paid over to the employee and the balance is used to settle the employer’s NIC due on the furloughed wage.
Job Retention Scheme Update: HMRC announces date
HMRC has informed the accountancy profession that they are aiming for a 20th April start date for claims. Businesses will need the following information on each of their furloughed employees:
* National Insurance number
* salary, National Insurance and pension contribution information that allows business to calculate the claim amount.
If you have not already done so, you need to enrol for PAYE online services. This can take up to 10 days. If you have a Government Gateway login you should check to make sure you have access to PAYE for employers and if not, request for this to be added to your account.
Follow the guidance here: https://www.gov.uk/paye-online/enrol
Please note that the new number for all Covid 19 enquiries to HMRC is 0800 024 1222.
Guide to Home Working – What Can You Claim?
Following advice from the government in response to the coronavirus, more and more businesses have transitioned to allow their staff to work from home. This leads to these businesses incurring new expenses and raises the question of “What costs can we claim?” for many, particularly those that have home workers for the first time.
Before looking at the particular expenses, it is important to note that costs cannot be claimed for furloughed employees, but only those that are carrying out work from the company from home, be it because the office has closed or they are self-isolating. With that in mind, the tax position for some of the more common costs home working is likely to incur is:
Mobile Phones: It is possible to provide each employee with one mobile phone (including SIM card package). This is deductible for the business and does not create a taxable benefit for the employee (regardless of any private use of the mobile).
Broadband: If an employee already pays for broadband, no additional expenses can be claimed. If you were to pay this for the employee, it would create a taxable benefit for them. If an employee does not have broadband at home already, the costs for this can be reimbursed so long as any non-business use is minimal.
Providing equipment (laptops, tablets, computers etc): Provided there is not significant private use of the equipment, there is no taxable benefit to the employee for having use of it.
Purchasing equipment: If an employee is required to purchase equipment (e.g. a laptop) to enable them to work from home, this can be reimbursed by the business. The tax treatment for this is the same regular purchases of equipment. So long as there is not significant private use of the equipment, and it will not be retained by employee after home working has ceased, there is no taxable benefit on the employee.
Electricity and Heating: It is possible to give employees £4 per week (£6 per week from 6 April) to cover the additional costs incurred without any tax consequences. This cost also qualifies as a deduction for the business.
For equipment, to ensure that you are complying with non-significant private use, it is recommended that a policy on this is set and made clear to any employees that private use should be minimal.
If you opt to allow for more than insignificant private use of company equipment, or plan to reimburse your employees over and above the “tax-free” rates, this creates a taxable benefit for the employee. These should be reported through a PAYE Settlement Agreement (PSA), through which the business can settle the tax and NIC that would usually be payable be the employee themselves. This means that the employee is no adverse effect on the employees.
During the pandemic, employers may wish to offer their employees the benefit of a salary advance, or an interest free (or low interest) loan. These are considered employment related loans, and provided the amount loaned is less than £10,000, there are no tax consequences for the employee.
Any loans in excess of this should be subject to the HMRC official rate of interest (currently 2.5% pa).
HMRC have published guidance on all these matters and this can be found here:
Further, important update re the self-employed
We promised you some more detail after yesterday's announcement. Here it is:
Last night Chancellor Rishi Sunak announced the 'Self-Employed Income Support Scheme' to those affected by the impact of COVID-19 which he said was equivalent to the furlough scheme for those paid via PAYE. Here are the key points:
The new grant is available to self-employed individuals or members of a partnership that meet the following criteria:
* Have submitted an Income Tax Self Assessment tax return for the tax year 18/19 and traded in tax year 19/20
* Would be trading currently, if it wasn't for the COVID-19 pandemic
* Intend to continue trading in 20/21 tax year
* Have lost trading/partnership profits due to the COVID-19 pandemic
* Majority of earnings (over half of your income) must come from self-employment
* Having trading (net) profits of up to £50,000, averaged over the last 3 years (less than 3 years if they don't have that history)
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 to allow HMRC to assess your eligibility.
You will not be eligible if you have only recently become self-employed, i.e. commenced after 6 April 2019.
What you'll be entitled to if you meet the above criteria:
* You will receive a taxable grant of 80% of the average profits from the tax years applicable
* Up to a maximum of £2,500 per month, the same limit as furlough workers through the Coronavirus Job Retention Scheme
* This will run for the next three months and may be extended, if needed
* It will also be backdated to the 1 March 2020
* Grants will be paid in one lump sum covering all three months, and will start to be paid by HMRC at the beginning of June.
How eligible individuals apply:
* You cannot apply for this scheme yet. HMRC will contact you if you are eligible and invite you to apply online.
* You do not need to contact them before they do so as they are urgently working to get things up and running.
Further update on how to claim for wage costs through job retention scheme
HMRC have released the details of how to claim for wage costs through the coronavirus job retention scheme<https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme>.
The main points are:
* You can claim for employees full-time, part-time, agency and zero hours or flexible contracts
* Employees must have been on your payroll at 28 February 2020
* Scheme will also cover employees who were made redundant since 28 February 2020, if they are rehired
* To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication.
* The employees cannot work while under furlough, this includes providing any services or generating revenue for the employer
* Employees on reduced hours/pay are no 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. This means they cannot be paid the reduced wage and 'topped up' to 80%.
* While on furlough the employees wage will be subject to income tax and national insurance.
* If your employees is on sick leave or self-isolating they should get Statutory Sick Pay, but can be furloughed after this.
* If your employee has more than one employer then they can be furloughed for each job.
* Full 80% must be paid to the employee
* All other aspects of employment law continue to apply such as maternity and paternity rights, accrual of holiday pay etc.
* Paid on either the average monthly wage in the year ending 5 April 2020 or March 2019 wage if higher
* For employees starting after 6 April 2019 it is paid on average monthly earnings since starting
How to claim
Employers need to make a claim for wage costs through this scheme.
You will receive a grant from HMRC to cover the lower of 80% of an employee's regular gross wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.
At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee's salary beyond this but is not obliged to under this scheme.
A claim will be permitted every 3 weeks. Payments will be made direct to the employer and it will be taxable income of the employer. HMRC will issue more guidance on how employers should calculate their claims for Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions, before the scheme becomes live.
Limited Company, Owner Managed Business?
A resume of what you need to know.
If you own your own business, the announcement of the 'Self-Employed Income Support Scheme' to those affected by the impact of COVID-19 was welcome for some but not others. In particular, this will not apply to directors who run their own limited company who are classed as employees. If this is you, read on…
To be the most tax efficient, most directors receive a minimum salary which is topped up with dividends. And as an employee, technically, directors will be eligible for the Job Retention Scheme whereby you can be furloughed and receive 80% of your salary. However, there are two practical problems.
1. Under this scheme directors cannot work: work is classed as providing services or generating revenue (unlike the rest of the self-employed, who can continue to work).
2. Directors would only receive 80% of their salary under PAYE, which is normally at low levels - note dividends are not included!
What other options are there?
Grants - only businesses with premises and receiving Small Business Rates Relief are eligible for a grant of £10,000. This will not be available to any businesses working from home, or with larger premises.
There is a £25,000 grant, but only for those businesses with a property with a rateable value of between £18,000 and £51,000 and it is only available for those businesses in the leisure, hospitality or retail sectors.
These grants are available online via your council website.
Loans - The business interruption loan is available which is available through your bank with an 80% guarantee from the government. There has been some backlash towards some banks however because some of them are still requesting personal guarantees. It is likely that business plans/cashflows will be required to support the application and demonstrate the viability of the business. If you are a M&S client, and given the seriousness of the situation, this is a service we would be happy to assist with at no cost.
All of this means that, very frustratingly, owner managed businesses currently have no significant measures available to them.
What can you do?
In order to survive the next few months, cashflow will be vital.
* Credit control - keep on top of any customers due you money
* If you can work you may want to consider offering a discount for early payment
* Raise invoices as soon as possible
* Speak to your suppliers and ask for increased payment terms, discounts
* Contact your utility provider - are you on the best tariff, any reductions available
* Review all your costs and reduce all that you can
* Furlough staff if necessary
* Look for ways to generate new income
* Speak to your bank re payment holiday for any loans if applicable
* Ask for time to pay for any PAYE due. Use the VAT deferral.
* Request a mortgage holiday
* Review costs - are you on the best tariff for your utilities
* Contact council tax office - councils can defer payments
If you want to chat about how your business has been affected, please do not hesitate to contact us.
Financial Support for the Self Employed (winners and losers)
With public pressure growing, the Chancellor announced this evening the government's plans for supporting those who are self-employed. More details on the support package are sure to follow in the coming days, but the main principle of the measure is that, much like the measures for employees, self-employed individuals will be eligible to receive taxable grants worth 80% of their average monthly profits (capped at £2,500 per month).
The monthly payment will be calculated based on an average of the profits included on the individual's tax returns for the last 3 years. If you have only traded and submitted tax returns for a year or two, then the average for those periods will also be taken into account. For those that have not yet submitted their return for the year ended 5 April 2019, they will have 4 weeks from today to do so in order to be included under the scheme.
Unfortunately, not all self-employed individuals will be eligible for this scheme. Only those with profits up to £50,000 and those whose self-employment profits make up the majority of their income will receive the grant. Additionally, anyone who only became self-employed after 6 April 2019 will not be entitled to any additional support, as it is only those with a submitted 2019 tax return that will be recognised.
HMRC will be in touch directly with those that are eligible to receive the payment, however it is currently expected that this will not happen until early June. In the meantime, those impacted are encouraged to claim universal credits.
We'll update you with more information as soon as we've looked in depth at what the Chancellor has said and what it might mean for you.
Extra three months to file your accounts.
The government has announced that businesses are to be given an extra three months to file their accounts with Companies House to let them prioritise responding to the coronavirus pandemic.
Under the measures, which came into force today, any company that applies for an extension to file their results citing Covid-19 will automatically and immediately be granted an additional three-months.
Useful links at Fife Council
Fife Council have updated their website to include a set of articles and links to help businesses at this trying time. It looks like this:
And you can access it here:
On Friday 20th March 2020 Chancellor Rishi Sunak announced a sweeping range of measures to be introduced over the coming days, weeks and months. Here is a summary of the main measures he announced:
* Government to pay 80% of wages for employees temporarily not able to work, up to £2,500 per employee per month. The payment will be in the form of a grant available from HMRC, available by the end of April (backdated to 1 March 2020). MORE DETAILS HERE.
* For the self-employed, a deferral of personal tax payments due on 31 July 2020, payments deferred until 31 January 2021. This is an automatic offer with no applications required. No penalties or interest will be charged in the deferral period
* No VAT payable by any business in the quarter to June 2020, with any amount deferred being due by the end of the 20/21 tax year. All businesses are eligible and it is an automatic offer with no applications required. Vat refunds and reclaims will be paid by HMRC as normal. VAT returns should still be submitted, any direct debits should be cancelled.
* The government's Coronavirus Business Interruption Loan Scheme will be interest free for 12 months rather than the initial 6 months, available from Monday (also available to large and medium sized businesses). Coronavirus Business Interruption Loan Scheme (CBILS) - British Business Bank British Business Bank<https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/> . 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.
* Increase in Universal Credit Standard Allowance of £1,000 for the next 12 months.
* Working tax credit basic element increased by £1,000 for the next 12 months.
* Housing Benefit and Universal Credit to be enhanced so that the local housing allowance will cover 30% of market rents for renters.
* Increase in benefits for self-employed, suspending minimum income floor thereby allowing self-employed access to Universal Credit equivalent to SSP for employees.
Coronavirus Job Retention Scheme
Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part 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 notify your employees of 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 set out further details on the information required)
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.
If you need advice, please don't hesitate to call us. You can also see the full summary of the government's actions to date here.
This morning, U.S. Treasury Secretary Steven Mnuchin announced via Twitter: that at President Trump’s direction, we are moving Tax Day from April 15 to July 15.
All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.
We expect the IRS will issue official guidance today or Monday, officially extending the deadline.
Individuals and small businesses can also delay paying any federal income tax payments up to $1 million and $10 million, respectively, until July 15, 2020. At this time, we don't know if the IRS will increase the tax payment limitations.
Getting more time to pay
As a result of the coronavirus outbreak there may be a strain on your business to meet its financial obligations. However, in order to ease the burden it may be possible for you to request a Time to Pay (TTP) arrangement with HMRC. A TTP arrangement will provide your businesses with some additional breathing space during these uncertain times to enable you to settle your existing tax liabilities. For many businesses, this could be invaluable.
More specifically, a TTP will allow you to settle your current tax liabilities in monthly instalments which are agreed with HMRC. Typically, this means you can spread your payments over a period up to 12 months, depending on your financial circumstances. In order to set up the TTP you will to contact HMRC on 0800 024 1222. ,, at which time they will talk you through your business’s current financial position and set a monthly amount that you both agree that would be manageable for you.
Before you contact HMRC you’ll need to know:
HMRC will ask you about:
As you can imagine the HMRC helpline may well be busy when you telephone but please persevere!
The following steps will be put in place to support businesses during the 2020-21 financial year:
• a 100% rates relief for retail, hospitality and leisure sectors on properties with a rateable value of between £18,000 and £51,000.
The finance secretary will also write to all local authorities urging them to respond positively to requests from rate payers for payment deferrals for a fixed period.
Support for businesses who are paying sick pay to employees
Small- and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. 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
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
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 next week to support 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. Businesses can access the first 6 months of that finance interest free, as government will cover the first 6 months of interest payments.
Support for businesses paying tax
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.
If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 024 1222. More information is available here.
Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim. Does your insurance include this? Please check with your insurer or broker.
Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.
The business helpline number is 0800 024 1222. The helpline will be open Monday to Friday 8.30am to 5.30pm – Currently, no further information is available but it looks like this might be in place next week.