Coronavirus Business Support Brief

To keep you up to date with the latest developments on Coronavirus support related to you and your business we have prepared a roundup of the latest actions taken by the Government.

If you have any queries relating to any of the points covered in this update or you require support with any matters, please speak to a member of our team today.

HM Revenue & Customs contacts self-employed individuals who could be eligible for the fourth round of the Self-Employment Income Support Scheme

HM Revenue & Customs (HMRC) is now contacting self-employed individuals who could be eligible for the fourth round of the Government’s Self-Employment Income Support Scheme (SEISS).

The fourth round of the scheme covers the period from 1 February 2021 to 30 April 2021 and is worth 80 per cent of three months’ average trading profits, paid in a single instalment capped at £7,500.

HMRC is contacting self-employed individuals whose 2019-20 Self-Assessment tax returns show trading profits of no more than £50,000 and which are equal to or greater than income from other sources.

Where someone is not eligible based on their 2019-20 Self-Assessment tax return, HMRC will then assess their eligibility based on their average trading profits for 2016-17, 2017-18, 2018-19 and 2019-20.

However, not all self-employed individuals who meet these trading profit requirements and are contacted by HMRC will be eligible for the fourth grant. They must also have traded in both the 2019-20 and 2020-21 tax years, be currently trading but impacted by reduced demand or unable to trade because of the pandemic, declare their intention to continue trading and ‘reasonably believe’ there will be a ‘significant reduction’ in trading profits between 1 February and 30 April 2021.

Self-employed individuals applying for the fourth round of grants will need to keep evidence of the impact of Coronavirus on their business activity. They must also decide if they consider a reduction in trading profits to be ‘significant’, a decision HMRC says it cannot make because “individual and wider business circumstances will need to be considered when deciding whether the reduction is significant”. Previous grants from the SEISS do not need to be taken into account in this decision.

The application portal for the fourth grant will open in ‘late April 2021’.

A fifth grant will cover the period from May 2021 to September 2021. Unlike the first four rounds of the scheme, it will be paid at two different rates, depending on the reduction in trading profits a self-employed individual has seen. Those whose turnover has fallen by 30 per cent or more in the year to April 2021 will once again be eligible (subject to other conditions) for a grant worth 80 per cent of three months’ average trading profits capped at £7,500. Meanwhile, those whose turnover has fallen by less than 30 per cent during this period will be eligible (again subject to other conditions) for a grant worth 30 per cent of average trading profits, capped at £2,850.

Applications for the fifth round will open in late July.

Furlough scheme guidance updated

HM Revenue & Customs (HMRC) has published a series of updates to its guidance on the Coronavirus Job Retention Scheme (CJRS), more commonly known as the ‘furlough scheme’.

The updates cover the changes to the scheme as it is extended from 1 May 2021 to 30 September 2021.

The guidance confirms that new employees who have not previously been eligible for furlough can be furloughed for the first time from 1 May 2021 onwards as long as they were included in a Full Payment Submission to HMRC by 2 March 2021.

As with the existing scheme, furloughed employees will continue to receive 80 per cent of their usual wages capped at £2,500 a month, or equivalent weekly or daily figures, for usual hours not worked under the extended scheme.

CJRS grants will continue to cover the full 80 per cent paid to employees in May and June, while employers must continue to cover the costs of the associated Employer National Insurance and workplace pension contributions. However, employers will also need to make a 10 per cent contribution in July and a 20 per cent contribution in August and September to the amount paid to employees.

The calculation of usual wages is based on the last pay period before the employee became eligible for furlough. Those dates vary, depending on whether the employee was reported to HMRC on or before 19 March 2020, 30 October 2020 or 2 March 2021. Any pay rises since an employee’s reference date are not taken into account for any time they are furloughed.

The new guidance also clarifies and changes several technical points relating to the calculation of furlough pay in various circumstances that employers will need to be aware of.

Full guidance for the CJRS is available here.

New claims needed to continue receiving working from home tax relief

Employees who are continuing to work from home as a result of the Coronavirus pandemic and whose expenses have not been reimbursed by their employers should make new claims to continue receiving working from home tax relief.

This is because claims made in the 2020-21 tax year, which ended on 5 April 2021, will not be carried over automatically to the current 2021-22 tax year.

The relief is intended to cover tax-deductible additional costs incurred by people working from home as a result of the pandemic, such as heating and metered water.

People can choose either to claim relief at a flat rate of £6 a week, which translates to weekly savings of £1.20 or £2.40 for basic and higher rate taxpayers respectively, without needing to submit evidence or they can claim for the actual costs incurred if these are above £6 a week.

Self-Assessment taxpayers can claim the relief on their Self-Assessment tax returns for 2021-22, while people who do not complete a Self-Assessment tax return can claim via gov.uk here.