We have been providing tailored advice and regular updates over the course of this pandemic to our clients through emails and our financial support guide. We thought that it would be useful to incorporate some of the subsequent queries into five questions with answers set out below.
I trade through a Personal Service Company drawing a nominal Salary and greater Dividends, what support is available?
Directors and employees are able to claim a grant of 80% of the total PAYE cost up to £2,500 per month per employee (not on the dividends). This is on the basis that they do not conduct any work for the company for a minimum of a three week period, under the coronavirus job retention scheme.
Majority of AMS Medical clients that are Directors are key workers, continuing to receive income and are unable to be absent for three weeks. The Directors will not be eligible for the grant. For those that are looking to claim the grant in respect of connected employees (such as spouses) due to a dip in private income, the employee should firstly be on a payroll scheme as from March 2020 and more importantly be able to clearly justify and demonstrate why their role has now become redundant. We expect an increase in the number of HMRC enquires following these claims, once the pandemic is over. Tax investigation insurance is available to cover any legal and accountancy costs in such an event.
My income is unaffected by the pandemic but are there any reliefs I should be aware of?
Yes, you can defer your:
- July 2020 Income Tax payment on accounts until January 2021,
- VAT due between 20th March 2020 and 30th June 2020 until 31st March 2021
- Business loans and mortgages and even your personal mortgages via the mortgage holiday incentive for a minimum of three months.
These flexible terms are welcomed by those in financial distress. For those that are unaffected, the above are deferments and will eventually need to be paid. From a cashflow point of view, it’s better to spread the payment rather than having to pay lump sums next year. Additionally, the mortgage holidays will accrue additional interest as you are deferring your capital repayments.
I am not able to furlough my staff as NHS are still paying me. What happens if my staff go on sick due to C-19?
HMRC will refund employers up to and only for 2 Weeks’ SSP per eligible employee who has been off work because of COVID-19. This equates to £188.50 per eligible employee. Any further sick absence due to COVID-19 will be paid to the employee as an expense to the practice, without reimbursement.
Given that income is still being received by NHS and furlough is not an option, this reimbursement is welcomed.
My business has been financially affected. What emergency support is available?
- Coronavirus Business Interruption Loan Scheme. The government will cover the ﬁrst 12 months of interest payments and any lender-levied fees, so smaller businesses will beneﬁt from no upfront costs and lower initial repayments.
- Job Retention Scheme. The Government is prepared to pay up to 80% of the wage costs of workers who are not needed at this time, up to a maximum of £2,500. This includes employees who are currently self-isolating.
- HMRC’s Time to Pay service. Any outstanding tax liabilities (Income Tax, PAYE, Corporation Tax), can be paid over an agreed duration. Payment plans are agreed on a case by case basis and are tailored to individual circumstances and liabilities. HMRC’s Time to Pay service can also be used to agree payment plans for Corporation Tax, PAYE, Income Tax and VAT liabilities (where the arrears precede the deferral period noted above).
- The deferral options answered in question 1
The above support measures are very much welcomed indeed for those businesses that have been financially impacted by the pandemic and should consider acting on all options.
Am I eligible for any of the business grants?
There are two grant funding schemes.
- the small business grant fund which provides a payment of £10,000 (available to those who receive small business rates relief) and
- the retail hospitality and leisure grant fund which provides payment up to £25,000 (ratable value of over £15,000 and less than £51,000)
If your rates are already being reimbursed by NHS, then restrictions may be imposed on future claims/reimbursements as there is an argument for duplication of income.Your local authority will write to you with details of how to claim this grant. If you have not already received this and are confident you meet the criteria, you can access the form the local authority website.