Coronavirus (COVID-19) Business and Tax Update

With news from the Chancellor ongoing, and daily announcements drowning your inbox, TV and phone, we explain exactly what changes will affect contractors and their business. Please note these are measures announced by the Chancellor and are not mandatory. These are quite simply here to help those at a difficult time.

Coronavirus Job Retention Scheme

Businesses are entitled to a grant that will allow them to pay 80% their employee’s wages. Payments can be backdated to the 1st March. Rules apply:

• Companies will be compensated up to 80% of their wages – up to £2,500 each employee per month.
• Employees must not be working at all during this time. These are known as ‘furloughed workers’.
• HMRC are setting up an online portal where employers can apply for this grant. HMRC are yet to release details of how this will affect limited company directors. Updates will be provided as soon as further details are released.

Update May 2020: The Job Retention Scheme has been extended until October 2020. Full details of all changes to the scheme can be found here: How does the Coronavirus Job Retention Scheme help Contractors? 

Self-assessment payments deferred

For self-assessment tax payments due by the 31st July 2020, all payments will be deferred until January 2021. No penalties or interest will be applied, and those affected will quite simply not pay the amount required until January 2021.

Statutory Sick Pay (SSP)

Those limited company contractor’s self isolating, or who are using a PAYE scheme, are entitled to claim statutory sick pay (SSP). Statutory sick pay will work out to be £94.25 per week and will be paid for by the government.

VAT payments deferred

VAT due between 20th March 2020 to 30th June 2020 will be deferred until April 2021. Please note there are some key points to be made aware of:

• This is a deferral so your VAT return will still be due for filing.
• If you defer your VAT payment you will need to schedule a manual payment to HMRC in April 2021. For example: if you cancel your direct debit with HMRC from April 2020, and then reactivate the direct debit in July 2020, direct debits will be taken on a quarterly basis as normal for the set amount. HOWEVER, the missing months deferred will need to be paid manually prior to April 2021. HMRC will not take this deferred payment by your direct debit.

HMRC ‘Time To Pay’ plan

Those in financial difficulty who will struggle to pay their tax in the coming months can be placed into an agreed payment plan. This will be judged on a case by case basis.

For all payments that have been missed or will be missed imminently contractors can call the HMRC Covid-19 TTP helpline on 0800 0159559. HMRC will advise you to call nearer the time should your tax not be due for some time.

Small business grant scheme for business office space

A £10,000 grant for small companies that occupy and pay business rates on properties and office bases. This excludes those working from home.

Universal credit for self-employed/sole traders (not applicable to Limited Company contractors)

This supports self-employed individuals who earn low income or are out of work. The application process for universal credits has been simplified and those in need have been granted grater access by HMRC. Full details can be found here: Universal Credit.

Full details from HMRC can be found here: Covid-19: support for businesses.

We will update you as and when new information becomes available.