Further Update
In our first message to you a few days ago we had provided you with our translation of current Government measures and practical immediate advice for you, and if you haven’t seen this yet please see https://www.blue-skies.tv/blue-skies-blog/important-information-and-practical-advice. Since that email, much has happened and importantly for us, more details and measures have now emerged from the Government in their attempt to stabilise and help UK businesses.
Getting straight to the point on this: some huge proposals made on Friday by the Chancellor, of which some may provide a big short term relief to many businesses with employees. At this time though, it is not so positive though for those that are self employed. In common however with most sources, we believe there will be further improvements announced over the course of the next week to financially support the self employed.
Regardless though of your trading status, it is clear that the packages proposed by the Government are designed to aid short term cash flow for businesses, by both allowing deferral of immediate payments due and providing interest free loans.
Government Measures- Updates
Employer Wage Subsidy (Coronavirus Job Retention Scheme)- Relevant to Limited Companies
For those that employ staff through their Limited Company
Government will pay up to 80% of employee’s wages, up to £2,500pm, for three months, backdated from 1st March 2020.
Companies can apply for this grant if employees of company are not working due to COVID-19, but in order to be eligible must notify the Government that the employees have ‘furloughed’ status(i.e that they would be ‘laid off’)
We can expect first payment to be made within weeks as per the Government
For those that are both directors and employees of their Limited Company (i.e. owner-managed business)
We are urgently investigating whether the financial help on offer will apply to you, as it is not yet clear.
If you are eligible, it is also not clear as to how the Government will calculate these salaries- especially important as for most of these companies, directors salary tends to be lower for tax purposes.
Rest assured that we will provide you with clarity on this as soon as we know more.
Coronavirus Business Interruption Loan
Interest free period has been extended from six months to twelve months.
You will be able to apply for this loan from Monday 23rd March 2020- see link below.
It is highly likely that you will need to supply income/expenditure figures to the bank during the application process, so please make sure you let us know ASAP if you plan on applying for the loan. We expect a lot of businesses will be applying for this.
DELAY to VAT Payments Due
Any VAT payments that would have been due by 30th June 2020 (i.e. up to quarter ending 30thMay), can now be deferred.
The subsequent VAT that will be owed to the VAT office can then be paid by 5th April 2021without penalty.
Though the Government have stated this is automatic, due to what we believe to be significant confusion at the COVID-19 helpline we will still contact them on your behalf to confirm that you wish to defer the payment.
IF YOU WISH TO DEFER VAT PAYMENT- CANCEL YOUR DIRECT DEBIT AS WE CANNOT GUARANTEE THAT HMRC WILL NOT ATTEMPT TO COLLECT THE FUTURE VAT PAYMENT.
This measure effectively means that all VAT registered businesses will be see 20% boost in their immediate cash-flow – this is positive news in short term and will give many businesses invaluable breathing space.
Please note that though the payment can be deferred, it is important that the VAT Return is still filed on time as normal.
DELAY to 31st July 2020 PERSONAL TAX Payments
Another very welcome move for many is the announcement of 31st July 2020 self assessment tax payments being deferred.
At the moment the eligibility is for self employed individuals. We will continue to monitor this and will find out in due course if this applies to all July tax payments on account (i.e. including Directors only).
Please let us know if you are going to struggle to pay this July tax payment as we can explore the deferral scheme and let you know what it means for you.
If you apply for the July tax deferral scheme, your next personal tax payments due will be due by31st January 2021.
In our view, the worst case scenario is that HMRC request both the deferred July 2020 tax payment, as well as the January 2021 tax bill, in January 2021. Based on the current state of affairs though, we optimistically suspect that provisions will be made by HMRC to ensure that taxpayers are not over extending themselves financially come January.
DELAY to Corporation Tax Payments
It has been confirmed to us that any upcoming corporation tax payments can be deferred by three months, and this is agreed with HMRC via the COVID-19 helpline.
This DOES need to be applied for- it is not automatic.
We recommend that any business with a corporation tax payment due within the next three months takes advantage of this three month deferral.
If you wish to do this, please contact us and we will do this for you.
COVID-19 Helpline
Following on from contact with COVID-19 helplines, we can gladly confirm that Blue Skies can contact the helpline on your behalf.
So please get in touch should you have an upcoming tax payment - as we can advise the tax office on your behalf of your circumstances .
Universal Credit- Relevant to Self Employed
Previous ‘minimum income’ restriction in place has now been lifted- resulting in the self employed being able to make a full claim of Universal Credit, at the same rate as SSP for employees.
This is worth around £95 per week per person.
Link to claim - https://www.gov.uk/universal-credit/how-to-claim
If you have children and are NOT claiming Child Benefit (CHB), then this applies to you and is IMPORTANT
Child Benefits are based on your total personal income (e.g. sole trader profits, company dividends/salary, royalties and rental income etc), and are payable based on the number of children that you have. All households can claim for this benefit, but in the past many ‘opted out’ as the Government changes resulted in having to repay some or all of the benefits received. However based on where the UK is at present, we fully expect most of those to have a reduced taxable income for at least the 2020/21 tax year, and so it’s likely many households will now be able to take advantage of CHB.
If you have children and HAVE NEVER SUBMITTED a claim for CHB
It may be that you didn’t make a claim as previous income levels were too high.
It is VITAL that you make a claim immediately, as new child benefit claims cannot be backdated more than three months- so the sooner you claim, the earlier you can receive the benefit.
Link to claim-https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/807955/CH2_online.pdf
If you have previously made a claim for CHB, and then subsequently opted out as income levels were too high
You can backdate your CHB claim to April 2019 and the easiest way to opt back in is via the personal tax account.
Link to personal tax account - https://www.gov.uk/personal-tax-account - if you have not signed up to this before, you will need to set it up.
Headline Point
Should you sign up/reinstate yourself for CHB from April 2020, even if you had to repay 100% of the benefit received back to HMRC, it would not be due until January 2022 as it is simply added to your personal tax bill for the 2020/21 tax year.
If you or your partner are going to earn above £50,000, please consider carefully before opting to claim child benefit and if required, call us to discuss it further.
To summarise:
Benefit payable to you per child up to the age of 16 (or up to 20 if they are in full time education)
One child = £20.70 per week, or £1,076.40 per year
Each child after = £13.70 per week, or £712.40 per year
This benefit starts to be repayable to HMRC in the following January should your taxable profits and other income be over £50,000, and becomes completely repayable at 100% once you hit £60,000.
In simple terms, for every £100 over the threshold you then repay 1%, or for every £1,000 over you repay 10%.
Do you need any other type of support?
We have had conversations with the Film & TV Charity this week, and they are keen to share the following from their website which you may find valuable:
‘’The Film and TV Charity remains open during this difficult time. We’re working hard to support people who work in the film, TV and cinema industry in the UK, particularly freelancers.
HOW TO ACCESS FINANCIAL SUPPORT
If you’re facing financial hardship, read the guidance provided on our website and look at all of your options before getting in touch. If you’re facing an urgent and immediate need for financial assistance, the charity may be able to offer a one-off grant.
You can complete the financial support form immediately. You don’t need to call the Support Line.
LEGAL ADVICE
We can also support you with anything from human resources to housing, as well as recommending other good people to speak to. We’ll arrange for you to receive a call back from a qualified legal advisor with the relevant specialism.
LOOK AFTER YOURSELF AND YOUR COLLEAGUES
With the situation changing rapidly, it’s important to look after your mental health.
You can ask for help. The Film and TV Charity’s Support Line can provide a listening ear and can also quickly refer you to trained counsellors who can provide more structured support over the phone.
Use Live Chat on our website, where you will reach a friendly advisor. ‘’
Even if the above is not useful to you now, the potential legal and financial aid can be a life-saver during times like these and so please do keep these details to hand for you, or any friends, family and colleagues that this may be helpful to.
Summary
Deferral of payments to HMRC will help many freelancers in the coming months and is a welcome move by the Government.
We have not yet seen any real proposals put in place to financially support the self employed. Although we will continue to monitor this and keep you informed of any developments.
This could also unfortunately be the case for those that are Limited Companies - as mentioned time and time again, we need to see the small print to determine how valuable the (very attractive sounding) Job Retention Scheme actually is.
If you have a child/children and are not claiming Child Benefit – review this urgently. It is potentially tax free cash and even if fully repayable to the Government, it will not be until January 2022.
Unless you are a shop owner, measures being implemented are heavily based on businesses incurring more debt (albeit with likely lower interest rates due to the recent rate reductions).
Remember that we are on hand and here to help you through this- please contact us so that we can discuss your specific circumstances and advise you accordingly.
We will as always continue to monitor the situation on a daily basis and provide you with updates as and when more details arise. As mentioned above, please feel free to copy/paste any extract of the above (or our original email/blog post) to anybody that you know that you feel may value the information at this time.
Best Wishes
Team Blue Skies