Government Announcement & Measures- Headline Points
Following the announcement that England will be going into full lockdown from Thursday 5th November through to Wednesday 2nd December, we wanted to update you as to the changes in financial measures implemented by the Government, as well as our recommendations for you based on the current landscape that we find ourselves in.
Though there are no ‘brand new’ measures that you need to be aware of, the below does breakdown the changes (both to dates and figures) for the existing/soon to commence schemes, and so hopefully this gives you the headline points that we feel that you should be aware of at this time:
Bounce Back Loan (BBL)- FURTHER EXTENSION TO APPLY!!
Announced yesterday was yet another extension to the BBL- with the scheme remaining open to apply until 31st January 2021.
We have detailed the headline points of this Government-backed loan throughout this ordeal, and so please check out our previous guidance via the link below should you need any more information. Alternatively, get in touch with the team and we can talk you through it personally and discuss your specific circumstances:
https://www.blue-skies.tv/blue-skies-blog/chancellors-financial-announcement-headline-points
As we have said on previous posts, should you be either be in financial difficulty at the moment, or feel vulnerable in that you may be in difficulty in the future, it is most certainly worth exploring this option of finance- this loan has been a valid lifeline for many of those that we look after, and as of yet we have little to no horror stories.
Job Retention Scheme (JRS)- EXTENDED
In a completely unexpected move, the JRS has been extended through to (at it stands) December 2020. As you may remember from our last post, October was the last month of the furlough scheme, with it being replaced by the Job Support Scheme/JSS (see below) from November onwards. As mentioned previously, the JSS was nowhere near as beneficial to owner-managed businesses (read- Limited Company directors) as the JRS, and so this extension, even if only for a month, will be welcomed by all.
IMPORTANT- AS MENTIONED IN PREVIOUS EMAILS, THERE IS SIGNIFICANT FOCUS PLACED ON FURLOUGH CLAIMS BY HMRC. THEREFORE, REMEMBER THAT THIS SHOULD ONLY BE CLAIMED IF YOU ARE DIRECTLY IMPACTED BY COVID, AND DUE TO COVID ARE NOT ABLE TO WORK (FOR EITHER ALL OR SOME OF THE MONTH). IF YOU ARE UNSURE, PLEASE GET IN TOUCH WITH THE TEAM TO DISCUSS IN MORE DETAIL
Updated schedule below:
· September 2020 Reduction to 70% of wages covered
· October 2020 Reduction to 60% of wages covered
· November 2020 Increase to 80% of wages covered (Though E’er NIC will be payable in some cases, for most owner-managed businesses this will not have an impact)
Job Support Scheme (JSS) - DELAYED
· Due to have been in place from 1st November 2020 through to 30th April 2021- but confirmed now will only commence once the JRS has ceased
· Significantly more hurdles to jump to claim the allowance
· Scheme is focused on employees (or company directors) that are working at least 20% of their ‘normal’ working hours
· The golden number that we are seeing so far is that a maximum of 22% of total salary
· We are reserving both judgement and guidance on this one for now due to the delayed implementation, and possible changes in figures in future relating to this scheme
Self Employed Income Support Scheme (SEISS)- RELEVANT TO SOLE TRADER/PARTNERSHIPS
On our most recent post last month, the guidance for the SEISS was that grants will be significantly reduced to only 20% of average profits- being a maximum of £1,875 per grant. This figure changed very recently however to 40%, only then to be followed by yet another revision to the figures last night.
To reflect the soon to be enforced November lockdown, 80% of average profits will be paid for the month followed by 40% (as it stands) for both December and January. This brings the average pay-out to 55% of trading profits- see below:
November to January 2021 55% of average profits paid, being a maximum of £5,160 per grant
February to April 2021 UNKNOWN – To Be Confirmed by the Government
IMPORTANT- IN ORDER TO APPLY FOR THE THIRD AND FOURTH GRANT ABOVE, YOU MUST BE ABLE TO DECLARE THAT YOU HAVE BEEN ‘SPECIFICALLY IMPACTED BY REDUCED DEMAND’ DUE TO COVID-19, AS OPPOSED TO JUST ‘ADVERSELY IMPACTED’
· Based on the Government’s current pattern of tweaking the financial handouts to reflect how ‘open’ the UK is, we would suspect that should there be any further enforced lockdowns that the percentages would be similar to what we see today.
· The application date for the third grant is the 30th November 2020, and though we have no details at present we would strongly suspect that you would claim for this grant in the same way as the previous grants.
Unfortunately, only those who were eligible for the first two SEISS grants remain eligible to claim for the November-January 2021 grant. We hope that the fourth grant is different, in that it finally opens the doors to those who have submitted their 2019/20 Tax Return, but again this is speculative and no Government advice has been offered in relation to this.
Should you need a recap as to what the SEISS entails, and the criteria for claiming, please check out the link below that will take you to our original post that outlines all for you:
Other Measures Available
Extension to Mortgage Payment Holidays
· New announcement that mortgage payment holidays, originally due to end on 31st October, have been extended
· For those who have not utilised this relief yet- you are able to claim a six month mortgage holiday
· For those who have already taken advantage of the three month holiday, you are able to extend the payment holiday until you hit the six month period. For example, if you have already had a three month mortgage holiday, this can be extended for another three months
· Officially, your credit score is not impacted by the mortgage payment holidays (as they are covered within the Government measures)- that being said however, there are reports that this has negatively affected people who have utilised the payment holiday and then subsequently have sought finance/credit/re-mortgage. If you think this may negatively impact you and want to talk it through, please give us a shout and we can provide you with our thoughts
Car Agreements/Credit Cards/Loans
· Though no new specific measures were released along with the mortgage payment holidays above, you should know that ‘tailored support’ can be offered by lenders of finance
· Tailored support could comprise of any of the following;
- Short term payment deferrals
- Reduced monthly payments
- Revised payment plan established
- Waiving or reducing interest- so that the debt doesn’t spiral out of control
· Simply contact the finance provider, explain your circumstances and ask what tailored support package can be provided to you to help you
VAT and Tax Deferrals
No new announcements in this regard, but to summarise our previous posts:
· July 2020 and January 2021 income tax payments, originally due by 31st January 2021, can be paid over twelve months, with the final balance payable by 31st January 2022:
- Interest will be payable on any amounts outstanding at 2.6% (side note- the BBL rate of interest is 2.5%)
- It seems to be the case (although a conclusive mechanism has yet to be confirmed 100%) that taxpayers will be able to access their online personal tax accounts, and set up a direct debit with HMRC without having to call them, and this will be available to those with tax liabilities due totalling less than £30,000
- If your tax liability is over £30,000, we believe you would need to call HMRC and agree a payment plan in that way
- Unfortunately, HMRC stopped allowing agents (i.e. Blue Skies and others) authority to set up plans on your behalf- and so you must do this yourself
· Outstanding VAT bills that were originally due to be paid by 31st March 2021 can now be spread over 11 monthly, interest free repayments, meaning that the final balance will now instead be due by 28th February 2022:
- Our current understanding is that to spread these monthly payments, you will need to contact the VAT office personally (we can supply you with relevant details needed) and set up a payment plan with them
- There may be an easier way of doing this though, much like the tax payments online, and so as and when have more information we will keep you posted
Business Grants – ONLY FOR BUSINESSES THAT OCCUPY A PROPERTY ON WHICH BUSINESS RATES ARE PAID, AND BUSINESS HAS HAD TO CLOSE THEIR PREMISES DUE TO IT’S LOCAL LOCKDOWN RESTRICTIONS
· Grants are available as follows:
- Rateable value of £15,000 or under- £1,334pm
- Rateable value of £15,000 to £51,000 - £2,000pm
- Rateable value of £51,000 over- £3,000pm
· Unfortunately, for the vast majority of people reading this, you will not be entitled to this grant; simply using your home as an office (even if this usage has significantly increased since March of this year) does NOT mean that you are entitled to this grant
· This will be handed out via the local council and we expect that the local authorities will be in touch. However, should you be fortunate enough to be entitled to this grant we would recommend getting in touch with them to seek details on how to apply
WATCH OUT FOR SCAMS- BOTH TO YOU PERSONALLY AND YOUR LOVED ONES
This is something that we unfortunately have to mention on a semi-regular basis, but we have both seen and heard of highly sophisticated and convincing scams that are now common-place. Therefore it is absolutely vital that if you receive a text, email or call from HMRC THAT YOU DO NOT RESPOND TO IT OR ACTION IT IN ANY WAY, AND CONTACT US INSTEAD.
HMRC will never:
· Ask for personal or financial information, or state that tax is due, via text
· Send notifications about tax rebates via email
· Use Whatsapp or social media to contact tax payers
HMRC will, however, at times phone tax payers when tax is due. Therefore if you receive a call like this, politely advise them that you will contact your tax advisor who will confirm the validity of any balance owed and you will then call them back, if need be, on their main debt number.
We cannot stress this enough, SCAMMERS WILL TRY TO KEEP YOU ON THE PHONE AND TRY TO PRESSURE/SCARE YOU INTO PROVIDING DETAILS. NO MATTER HOW CONVINCING, FOLLOW THE ADVICE ABOVE AND CONTACT BLUE SKIES FIRST- YOU CANNOT BE PENALISED FOR STATING TO HMRC THAT YOU WISH TO CONSULT YOUR TAX ADVISOR.
Remember that scammers have great success with the vulnerable and elderly, and so please speak to those that you care about and pass this warning onto them to avoid the pain and anguish that any type of fraud will inevitably cause.
Please see the following link for examples of scams that have been effectively used: https://www.gov.uk/government/publications/phishing-and-bogus-emails-hm-revenue-and-customs-examples/phishing-emails-and-bogus-contact-hm-revenue-and-customs-examples
Summary
As always please do get in touch with us to discuss any of the above in more detail. As has been offered all the way throughout this ordeal, should any of your friends/family need some general advice then we are happy to help out (regardless of income/industry). Alternatively, feel free to copy/paste this post without our name attached, or direct to our blog - https://www.blue-skies.tv/blue-skies-blog if you believe somebody may benefit from this post or any historic ones.
It is clear from the number of changes made to all schemes by the Government that though measures/dates/figures may be set in stone today, by tomorrow there could be significant changes. With that in mind, rest assured that we are monitoring this on a daily basis and should there be anything at all that materially impacts you, we will be in touch. We understand that another lockdown not only can adversely impact your income but also your well-being, and so please remember that there are organisations such as Film & TV Charity (https://filmtvcharity.org.uk/we-can-help/support-line/) and Mind (https://www.mind.org.uk/need-urgent-help/) who you can contact at any point for free.
As mentioned before, the vast majority of freelancers in the UK are in a worse position than they were financially before COVID struck. No doubt this has caused real worry for many people, and so please do get in touch with us to discuss any concerns that you have. We are more than able and willing to help you with cash-flow planning, overall business strategy and provide you with our thoughts as to any debt that you have and how to manage it effectively and efficiently. Get in touch with us- this is exactly what we are here for!
Best Wishes
Team Blue Skies