Coronavirus Business Support – Our Latest Updates
The UK Government has taken unprecedented steps to support businesses affected by the economic impact of the Coronavirus pandemic, announcing billions of pounds of funding and finance to help them during these challenging times. Although some aspects of the Government’s plans are yet to be finalised. The information included is our interpretation of what has been published at this time, This may change in the future as further information and clarity of the information already published becomes clearer.
We fully understand the difficulties that you may be facing and want to assure you that our team are here to help. To find out how we can support you, please speak to our team today. We will be updating this page regularly.
LATEST UPDATES – 30th March 2020
Cash grants for retail, hospitality and leisure businesses
The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
Businesses in these sectors with a property that has a rateable value of up to £15,000 may be eligible for a grant of £10,000, whilst businesses in these sectors with a property that has a rateable value of between £15,000 and less than £51,000 may be eligible for a grant of £25,000.
You are eligible for the grant if:
- your business is based in England
- your business is in the retail, hospitality or leisure sector
- your business has a rateable value of under £51,000
Properties that will benefit from the relief will be occupied properties that are wholly or mainly being used:
- as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
- for assembly and leisure
- as hotels, guest and boarding premises and self-catering accommodation
How to access the scheme
Whilst it was originally announced that you would not need to do anything as the local authorities would write to those businesses eligible for the grants, the local authorities have been updating their websites to include the facility to claim the grants.
Cash grants for businesses that pay little or no business rates
The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.
You are eligible if:
- your business is based in England
- you are a business that occupies property
- you are receiving small business rate relief or rural rate relief as of 11 March
How to access the scheme
Whilst it was originally announced that you would not need to do anything as the local authorities would write to those businesses eligible for the grants, the local authorities have been updating their websites to include the facility to claim the grants.
New HMRC helpline to help businesses concerned about paying their tax due to coronavirus (COVID-19)
HMRC has introduced a dedicated helpline to support businesses and self-employed individuals facing difficulties paying their tax bills due to COVID-19. The telephone number for the new helpline is 0800 024 1222. The helpline is available Monday to Friday, 8am to 4pm (but not Bank Holidays).
The primary support will be provided in the form of Time to Pay arrangements.
What is Time to Pay?
Time to Pay can involve measures, including:
- Agreeing an instalment arrangement for the payment of outstanding taxes;
- Suspending debt collection proceedings;
- Cancelling penalties and interest where you have administrative difficulties in contacting or paying HMRC immediately
What are the criteria for obtaining a Time to Pay arrangements?
Whilst it is not clear at the moment what criteria HMRC is using with respect to requests for Time to Pay arrangements in circumstances where an individual or business has been affected by the impact of coronavirus, the Government has indicated that HMRC’s approach will be more lenient.
HMRC’s general guidance is that it will normally only provide Time to Pay arrangements in where a business or individual “Can’t Pay”, as opposed to where they “Won’t Pay”.
HMRC will ask a series of questions over the phone in order to determine whether someone “Can’t Pay” or “Won’t Pay”.
What might I need to provide?
According to HMRC’s manuals, “Can’t Pay” or “Won’t Pay” status can sometimes be determined only on the basis of a phone call but, at other times, will require detailed cash-flow forecasts before proceeding.
For corporate debt, HMRC asks questions including:
- why the company cannot pay
- what the company’s banking facilities are
- what the company has done to raise money
- what the company does
- what changes the company is making
- what debtors and creditors the business has
- what the company thinks they can afford to pay
- how the company thinks they can repay the debt and pay their on-going liabilities on time.
Meanwhile, individuals will be asked to provide a detailed breakdown of their household expenditure.
HMRC will use this information to determine:
- your financial viability
- the likelihood of a Time to pay arrangement succeeding, and
- suitable enforcement options if Time to Pay is not successful or can’t be agreed.
If you require assistance in making a claim for a Time To Pay arrangement, please contact our tax team we are here to help. You can also view the HMRC webpage here
Updated – 27th March 2020
Coronavirus Self Employed Income Support Scheme (CSEISS)
Following the announcement that businesses will be reimbursed by HM Revenue & Customs (HMRC) for 80 per cent of the employment costs of ‘furloughed’ workers for at least three months from March, the Chancellor has announced a similar scheme for self-employed individuals.
The Self-Employed Income Support Scheme (CSEISS) will pay self-employed individuals an amount equivalent to up to 80 per cent of their average monthly trading profits, capped at £2,500, to cover at least the three months from March. The amount will be paid in a single lump-sum and will be based upon tax returns from 2016-17, 2017-18 and 2018-19.
Crucially, self-employed individuals will still be able to do business while they are in receipt of a grant from the scheme.
To qualify for the scheme, a self-employed individual must have trading profits of no more than £50,000 and must receive the majority of their income from self-employment. They must also have submitted a Self-Assessment Tax Return for 2018-19. Anyone who has missed the deadline will have four weeks from 26 March 2020 to do so before they become ineligible for the scheme.
People who pay themselves a salary and dividends through their own company will not be eligible for the scheme, but could be eligible for the Coronavirus Job Retention Scheme if they use PAYE.
HMRC will contact everyone eligible for the scheme directly, inviting them to apply for the support via an online portal. The Chancellor said that the first payments will be made at the beginning of June 2020.
The full criteria for qualification for the scheme are:
- Be self-employed or a member of partnership;
- Have lost trading/partnership trading profits due to COVID-19;
- File a tax return for 2018-19 as self-employed or a member of a trading partnership. Those who have not yet filed for 2018-19 will have an additional 4 weeks from this announcement to do so;
- Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020 to 2021
- Have trading profits of less than £50,000 and more than half of your total income come from self-employment. This can be with reference to at least one of the following conditions:
- Your trading profits and total income in 2018/19
- Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19.
Further details are available here.
Accessing the Coronavirus Job Retention Scheme
With substantial restrictions for everyone on the circumstances in which we can leave our homes, and many businesses being forced to close, the Chancellor has announced a scheme to reimburse up to 80 per cent of the cost of the wages of ‘furloughed workers’.
What is a ‘furloughed worker’?
Anyone designated as a ‘furloughed worker’ will remain on your payroll, rather than being laid off. However, they will not carry out any work for your business or organisation. There is no option to keep them working on reduced hours.
They will generally be people who would otherwise be at risk of being laid off or being made redundant.
Furloughed employees will still accrue continuous service and will still be entitled to the usual terms and conditions of their employment, other than pay and benefits. This means that their contractual notice period remains in effect during a period of furlough and they would remain entitled to statutory redundancy payment in the event they are made redundant during their furlough.
How do I designate an employee as a ‘furloughed worker’?
You will need to notify the relevant employee that you are changing their employment status to ‘furloughed worker’.
Designating someone as a ‘furloughed worker’ remains subject to the provisions of existing employment law and their contract of employment and so, because ‘furlough’ is a new concept, in most circumstances, it will be necessary to agree to a furlough with the employee concerned. This agreement should ideally be made in writing.
An employee cannot designate themselves as a ‘furloughed worker’.
Can I force someone to become a ‘furloughed worker’?
This is unlikely, but where the alternative is that they will lose their employment entirely, owing to being at risk of lay-off or redundancy, fewer workers are likely to decline to be designated as a ‘furloughed worker’.
What do I get if I designate an employee as a ‘furloughed worker’?
HM Revenue & Customs will provide you with a sum equivalent up to 80 per cent of each furloughed workers’ total wage costs, up to a limit of £2,500 a month, for three months initially, backdated to 1 March 2020. This excludes National Insurance Contributions and Pension Contributions. Click here to find out more.
Can I pay the ‘furloughed worker’ more than 80 per cent of their usual salary?
Yes – you are free to do so if you wish but you are not required to do so. For higher-earning employees who are paid more than £2,500 a month, this could be very expensive. However, this cost needs to be balanced against the benefit of helping to retain that employee in the business.
Can workers be brought back to the business and placed on furlough where they have been dismissed owing to a lack of work?
It appears that this will be possible if the employer agrees to bring the employee back and keep them on the payroll. The cut-off date for employees dismissed in these circumstances is 28 February 2020.
How do I apply to the scheme?
HMRC is setting up a new online portal through which you will be able to make applications. The Government has said that it will be ready in time for the first payments under the scheme to reach businesses before the end of April.
What information do I need to provide?
Full details of the information that you will need to provide to access funds under the scheme have not yet been announced. However, we anticipate that you will need to provide the below:
- The employee’s name
- National Insurance Number
- The amount they have been paid in at least each of the last three months of normal employment
- Contract details, such as whether their employment is permanent or temporary and whether they work part-time or full time
- The date they were designated as a ‘furloughed worker’
- The date that they will cease to be designated as a ‘furloughed work’ if this is known.
For detailed advice and for help to manage your payroll and access the scheme, please contact our payroll team we are here to help.
Updated 26th March 2020
To help you plan through this pandemic, we have put together a checklist to help you mitigate some of the business impacts:
- Consult with employees, on matters including:
– Statutory sick pay
– Coronavirus Job Retention Scheme
– Redundancies and layoffs
- Defer tax payments by establishing Time to Pay agreements with HM Revenue & Customs (HMRC), for:
– CIS (Construction Industry Scheme)
– MGD (Machine Games Duty)
- Claim business rates reliefs and grants announced by the Government, via your local authority
- Consider using the Government’s Coronavirus Business Interruption Loan Scheme
- Consider using the three-month rental moratorium on commercial leases
- Prepare new or updated bank facilities, including overdrafts and capital holidays
- Liaise and notify customers, suppliers, contractors and trading partners of your contingency plans
- Defer capital expenditure
- Defer finance payments, hire purchase and leasing
- Accelerate income, where possible
- Update credit control procedures
- Reduce stock levels
- Review insurance policies
- Review all contractual obligations and advanced orders
- Review your business’s terms & conditions
Here to Help
This checklist, while detailed, is not comprehensive and we recommend that you speak with us to put a clear plan of action in place to address the short and medium-term impact of this crisis on your business.
We are helping several businesses with their preparations for Coronavirus and are standing by to assist you. To find out how we can help you and your business, please contact us.
Coronavirus Business Interruption Loan Scheme (CBILS)
Small to medium-sized businesses in the UK are now able to apply for finance via the Coronavirus Business Interruption Loan Scheme (CBILS) to help them deal with the operating costs of their business and to assist with maintaining cash flow.
To help you apply for a loan, we have answered some common queries below:
Am I eligible?
The scheme is available to businesses with turnovers up to £45 million with UK-based business activity. At least 50 per cent of the business’s turnover needs to be in the form of trading activity.
Decision-making on whether you can obtain a CBILS has been delegated to the accredited CBILS lenders, which range from high-street banks to smaller specialist local lenders. As such, businesses must go through the full credit assessment process for each application they make.
The lender will consider your application and is likely to check first whether you qualify for a loan on normal commercial terms or whether the CBILS is more suitable.
Some sectors will not be eligible to apply for a loan under the scheme. Full details of eligibility and an FAQ link to the British Business Bank can be found here.
What finance can I access?
Funding can be in the form of loans, overdrafts, invoice financing or asset finance, although each lender will be able to choose which elements of the scheme it supports.
Facilities will be made available from £1,000 to £5 million, subject to a lender’s criteria. CBILS will be interest-free for the first 12 months, as the Government has guaranteed to cover these payments during this period.
The Government and the British Business Bank, which is helping to administer CBIL, have confirmed that no setup fee will be charged.
Am I liable for all of the debt?
The borrower will remain 100 per cent liable for the debt. An 80 per cent guarantee offered by Government is simply to provide some recourse for the lender in the event of a borrower defaulting on their debt.
How do I apply?
The scheme will be delivered through existing commercial lenders, backed by the Government-owned British Business Bank. There are currently 40 accredited lenders able to offer the scheme, but more are being added regularly.
These are the steps that you should take in applying for a loan:
- Decide which form of finance you require and identify which accredited lenders can offer it. This can be done by using the British Business Bank’s filter tool by clicking here. At this point you should also have an idea of what financial support will be required and for what period.
- In the first instance we would suggest that this is your existing bankers provided that they are on the list
- If your current bankers are on the list and are providing the type of finance that you require, then approach your normally contact, or the branch at which your account is based. If they are not providing the type of finance required then
- Research what other lenders are offering via their websites.
- Collate all necessary information to make an application, including an up to date business plan, detailed management accounts and cash flow/financial forecasts. These should be realistic, and as accurate as possible, as banks do not like additional requests, or alterations as this will slow an application down.
- Make an application with your chosen lender that suits your requirements. The loan application process is likely to differ from lender to lender. It is impossible at this time to save how long any application will take to be processed and the cash made available.
Any lender will only look at business that were viable before the crisis as they will apply their normal lending criteria. The amount not underwritten by the government, will still need to be secured.
Here to Help
If you feel you may need to access this scheme you should be putting together the information you need to make an application. We can assist with the preparation of supporting evidence to support your claim.
To find out how we can assist you with your CBILS application or for any advice on the facilities being offered by a lender, please contact us.
Business rates relief extended
Two significant elements of the measures announced by the Government to ease the financial impact of the Coronavirus crisis have been business rates reliefs and grants to certain ‘at risk’ businesses.
These include grants for businesses in the hospitality, leisure and retail sectors, a grant for businesses that pay no or little business rates and 100 per cent business rates relief for businesses working in certain sectors.
Estate agents, lettings agencies and bingo halls
Businesses in a wide range of sectors that have been particularly badly hit by the Coronavirus crisis are now eligible for a 100 per cent discount on their business rates from 1 April 2020 to 31 March 2021.
The Government has now confirmed that this list of sectors now includes estate agents, lettings agencies and bingo halls, as they have been adversely affected by the pandemic and were not in the original list of industries.
The full list of sectors to receive a discount is as follows:
- Music venues
- Small hotels
- Sports clubs
- Night clubs
- Estate agents
- Lettings agencies
- Bingo halls
Where a property has been closed owing to the crisis, it will still be treated as occupied.
However, where a property becomes vacant in the next 12 months, a 100 per cent full rate will be charged after three months of void rate holiday, unless the rules are amended.
Local Billing Authorities will administer the application process and they should already have knowledge of which properties are eligible, so it would be best to contact them in the first instance.
Many businesses will be struggling with a variety of issues due to the impact of the Coronavirus outbreak, but a key consideration for many will be employment costs and staff safety.
The Government has taken significant steps to help businesses protect jobs by introducing measures that seek to subsidise wages and provide refunds for those on sick pay as a result of the virus.
Coronavirus Job Retention Scheme
Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would have otherwise be laid off during the crisis. All businesses are eligible.
The scheme will reimburse up to 80 per cent of the cost of the wages of ‘furloughed workers’ up to £2,500 per employee per month. At present it is not clear whether the “grant” is to net or gross employment costs, but given the wording in the announcements it is likely to be gross employment costs.
The employees designated as furloughed workers may be a change to the status of an employee and remains subject to existing employment law, and depending upon the employment contract, may be subject to negotiation
This scheme will initially run for three months from 1 March 2020 and will be backdated. The Scheme will be administered by HMRC and all UK businesses and charities will be eligible.
Further guidance has also been produced by the Institute of Chartered Accountants in England and Wales (ICAEW), which can be found here.
As more information becomes available this note will be updated
If businesses are unable to wait until then they may wish to seek immediate financial assistance via the Coronavirus Business Interruption Loan Scheme to support cash flow in the meantime.
Statutory Sick Pay (SSP)
Anyone who contracts Coronavirus, or who is required to self-isolate under the Government’s current guidance may be entitled to statutory sick pay (SSP).
Only qualifying employees, whose average weekly earnings are above £118 are entitled to SSP. SSP is paid at a rate of £94.25 per week.
Full details of the new measures relating to SSP can be found in our earlier guidance by clicking here.
The Government has provided further advice to employees, which can be found by clicking here.
Contractual Sick Pay
It may be necessary to pay additional sick pay in circumstances where this is provided for in a contract of employment, in the employee handbook, or even where it is usual practice to do so.
Layoffs owing to reduced work
It is possible that businesses, especially those in certain sectors, will see a reduced workload as a consequence of Coronavirus.
In these circumstances, and where allowed for in the contract of employment, employees can be laid off temporarily.
Employees who are laid off must be paid a guarantee payment of up to £29 a day and a maximum of £145 in a three-month period. After four weeks, employees may be able to request that they are made redundant. In most cases, businesses are likely to make use of the Coronavirus Job Retention Scheme now that it is available to employers.
Here to Help
If you require assistance with your payroll or have queries regarding any of these measures, please contact our team today.
Tax and Companies House Deferrals
As part of its measures to reduce the economic impact of the Coronavirus crisis, the Government has announced deferrals to a number of HM Revenue & Customs (HMRC) and Companies House deadlines to ease the strain on businesses and self-employed individuals.
VAT payments have been deferred by three months from 20 March 2020 until 30 June 2020. During this period, businesses will not need to make VAT payments to HM Revenue & Customs (HMRC).
Businesses will have until the 5th April 2021 to pay any liabilities that have accumulated during this period. It is our understanding that no interest is payable on the amount that should have been paid. Although there is no guidance at present, interest may well start too accrued on any part of the liability with effect from the 6th April 2021. The deferral is automatic and businesses do not need to apply to be able to benefit from it.
However, you must cancel the direct debit manually with your bank immediately to make use of this deferment.
VAT refunds and reclaims will be paid by the Government as normal.
Again at present there is no guidance, but we believe that businesses should still complete and file Vat returns as normal, in order to establish the liability/refund. There may of course be circumstances when this is not possible, and we believe that H M Revenue and Customs will take these into account, when looking at reason why Vat
Returns may not have been filed on time.
Income Tax Self-Assessment payments due on 31 July 2020 will be deferred until 31 January 2021 for self-employed individuals.
Again, this is an automatic offer and it is not necessary to apply to benefit from it. No penalties or interest for late payment will be charged during the deferral period.
Time to Pay (TTP) Arrangements
HMRC is making TTP arrangements available to any business that can show that all other avenues for financing have been exhausted.
Companies House Filing
Businesses affected by the COVID-19 pandemic can apply to Companies House to request an extension to file their accounts, reports and confirmation statements.
Companies House is offering a maximum extension of three months for struggling businesses, but they must meet stringent conditions, including a rule that an appeal to extend must be lodged before a company’s current filing deadline.
Appeals will be treated on a case-by-case basis and the process will mirror the existing criteria based on cases for unforeseen poor health.
Companies House has made it clear that any company accounts filed late will still incur an automatic penalty.
Here to Help
If you require assistance with the deferral of tax or Time to Pay arrangements, please speak to our team.
The ongoing COVID-19 pandemic is having a significant impact on all aspect of individual’s lives, not least their personal finances.
During this difficult period, it is likely that your staff may look to you for advice if their own income is affected by the economic impact of this virus.
To help them make sense of your rights and what financial support may be available to them, we have prepared a useful summary below:
Statutory Sick Pay
Anyone who contracts Coronavirus, or who is required to self-isolate under the Government’s current guidance may be entitled to statutory sick pay (SSP). SSP is paid at a rate of £94.25 per week.
We are currently awaiting an announcement from the government as to the additional measures that are going to be introduced for the self-employed. We will update this note once further details are available
If you cannot work due to Coronavirus and are self-employed you are not likely to be eligible for sick pay and may find that the volume of work available to you subsides.
If you find yourself in this situation you can apply for Universal Credit and/or apply for New Style Employment and Support Allowance (ESA) to top up your income.
It is strongly advised that you don’t delay making a benefit claim if you think you may be affected by Coronavirus. To make a claim you will not be required to produce a Fit Note.
The Government has confirmed that self-employed individuals can claim ESA from the first day of illness or self-isolation instead of waiting for seven days, but it may take several weeks for a claim to be processed under Universal Credit.
Through ESA you can claim up to £73 per week – the amount won’t be affected by either you or your partner’s savings or income, though if you get a private pension worth more than £85 per week it could be reduced.
Payments for ESA are made fortnightly in arrears. Claimants who meet the criteria should, therefore, receive their first payment after two weeks.
Those who are self-isolating will not be required to go to a jobcentre to begin this process as it can all be done online.
To help those applying for Universal Credit, the Government has removed the Minimum Income Floor.
Typically, if you’ve been running a business for a year or longer when you claim Universal Credit, the Government works out your benefit payment based on the minimum income floor.
Removing the floor means that some claimants will get extra money to make up for lost earnings if they decrease due to the Coronavirus.
More than 500,000 people have made a new claim for Universal Credit in the last week or so to cover their lost income. If you need to make a claim, it is therefore advised that you do so at the earliest opportunity.
For further advice on the options available to you and to make an application, please click here.
Further measures to support those in self-employment are expected imminently.
HM Revenue & Customs (HMRC) has launched a new helpline to support individuals that are concerned about paying their tax due to disruption related to Coronavirus.
During this crisis, some households will see a decline in their household income, which may make paying bills a challenge.
To help with this, lenders have agreed with the Government to offer tolerance and help on mortgage payments.
Those struggling with their mortgage payments will be given a three-month ‘holiday’, allowing customers a temporary break from making payments during this time.
Banks are offering different solutions to this ‘holiday’, with some extending the term of the mortgage, while others are adjusting payments so that unpaid months are spread over the life of the mortgage, meaning that borrowers experience a very small uplift in future payments. Be aware that the shorter the term left on your mortgage the larger the increase will be in your future monthly payments.
It is advised that you speak with your bank in advance if you anticipate that you may need to make use of this facility so that you are clear on the terms being offered.
Lenders may wish to confirm the following key points to satisfy their eligibility criteria for a mortgage payment holiday:
- Your finances have been affected by Coronavirus
- You are up to date with your monthly mortgage payments and not in arrears
- You have consent from everyone named on the mortgage
Some lenders have already contacted mortgage holders to offer a mortgage holiday, which in some cases can be requested online via an application form or a fast track approval process. Requesting a holiday should not affect your credit rating.
Loans and credit cards
Although the Government hasn’t asked banks to help those with loans and credit card payments, many banks have already announced that they will offer support here too for those struggling with debts.
Most banks and credit card firms have confirmed with the MoneySavingExpert website that they will allow emergency credit limit increases if necessary, while others are offering repayment holidays and a few will waive fees for missed payments.
During these uncertain times, it is recommended that you speak with all lenders to see what assistance is offered instead of having missed payments without permission, which may incur fees and affect your credit score.
Savings and investments
Banks are now making it easier to access fixed-rate savings accounts without penalty to help those affected by the pandemic.
According to the MoneySavingExpert website, nine banks have so far offered this facility to savers, so it is worth checking with your bank or building society to see whether your money can be accessed easily.
During uncertain economic times such as these, if you hold any investments it is best to seek specialist advice from an independent financial adviser to make sure that you are not adversely affected. If you do not have an adviser then we can recommend somebody suitable.
Schools across the UK are closed and many will be worried about parents and grandparents who have been asked to employ social distancing and self-isolation.
Due to these arrangements, it may be necessary to take time off work to care for another person. Whether workers have a right to be paid will depend on the terms of their contract.
There is an implied term (unwritten) in all employment contracts that workers must obey reasonable instructions from their employer.
The Advisory, Conciliation and Arbitration Service (ACAS) has called on employers to listen to the concerns of their staff but said that workers who refuse to follow instructions could still face disciplinary action.
Where an employee has urgent caring responsibilities, they may be able to take a ‘reasonable’ amount of time off for dependents but this does not have to be paid unless stipulated in a person’s contract.
The Government has introduced new legislation that has suspended the eviction process for tenants for at least three months to help those struggling with their rent.
To ensure buy-to-let landlords aren’t adversely affected they will be able to make use of the same three-month mortgage holiday as regular lenders.
Renters may also wish to check whether they are entitled to any financial help with their housing, which could be from benefits such as Universal Credit. You should also check whether you could apply for a discretionary housing payment from your local council.
Many of those affected by the closure of companies, debts or loss of investments may need to consider personal insolvency options, which include:
- Individual voluntary arrangement (IVA)
- Debt relief order (DRO)
If you are considering taking any of these steps in the coming months it is vitally important that you seek professional advice.
Here to Help
The Government continues to make new announcements daily and has said it will do ‘whatever it takes’ to help individuals through this crisis. If you are concerned about your finances you must speak to a professional adviser to see what options may be available to you. To find out how our dedicated team can help you, please contact us today.
Working from home
With the Government recommending that people work from home where possible, many businesses will have had employees working from home for the first time in recent weeks.
Amidst the logistics and practicalities of setting employees up to work from home, it could be easy to overlook the implications of increased home working for your business’ tax bill.
To help you navigate the various tax considerations, we have put together a short guide to the points you need to be aware of.
For most office-based employees, the obvious piece of equipment they will need to be able to work from home is a computer.
However, equipment will not necessarily be limited to computer equipment and can also include stationery and consumables such as printer ink. HM Revenue & Customs provides exemptions in respect of items and equipment provided to employees to enable them to carry out their jobs.
Provisions covered by the exemption include stationery, office furniture, office and workshop supplies, as well as computer equipment. The exemption may also extend to the provision of home telephone lines but only in circumstances where there is a clear business case for this.
Two further conditions need to be met for the exemptions to apply:
- The provision must not be used significantly for private purposes by the employee or a member of the employee’s family; and
- The provision must be provided solely for the employee to be able to carry out their duties and must not belong to one of the following excluded categories:
– Vehicles, boats and aircraft;
– Any construction, extension or alteration of the employee’s living accommodation, such as the installation of a loft conversion office space or a garden office.
Clearly, there is a potential for employees to incur additional costs, such as heating and lighting.
The employer can reimburse these costs tax-free where there is a ‘homeworking arrangement’ between an employer and an employee and the employee must work at home under the terms of these arrangements.
A notable exception here is costs that are unaffected by whether or not an employee is working from home or not, like mortgage repayments or rental payments.
Similarly, the cost of existing broadband connections cannot be reimbursed tax-free, although new connections can be, where the employee does not already have a broadband connection.
Tax relief for employees working from home
In circumstances where the employer does not meet the additional costs of an employee working from home – such as heating, water and electricity – but requires the employee to work from home, it may be possible for the employee to claim tax relief in respect of these costs.
Expenses for both personal and business use are not eligible for tax relief.
Employees can use HMRC’s online tool to determine whether particular expenses would be eligible for tax relief. The tool can be viewed here.
Here to Help
The best way of ensuring that you can make the most of the various tax reliefs available is to ensure that there is a written agreement in place between you and the employee that can be provided as evidence to HMRC.
Contact us today for detailed advice, tailored to your specific circumstances.
Commercial Rent Deferrals
To support UK businesses, the Government has confirmed that commercial tenants that are unable to pay their rent due to disruption caused by the Coronavirus pandemic will not face eviction.
The Government had already banned evictions on private residential tenants but has now confirmed that the three-month moratorium on evictions and debt enforcement will be extended to cover commercial leases as well.
Although many commercial landlords and tenants are already coming to voluntary arrangements about rental payments, the Government is taking steps to support businesses struggling with their cash flow due to Coronavirus who are concerned about the prospect of debts and possible eviction.
The new measures confirmed in the emergency Coronavirus Bill ensures that no business will be forced out of their premises if they miss a payment in the next three months.
However, tenants will still be liable for the rent due in arrears after this period and the Government has said it is actively monitoring the impact on commercial landlords’ cash flow to ensure their operations are not put at risk.
It is not yet clear how tenants will be expected to repay deferred rent payments and this might differ from one lease to another, but a variety of options may be available, including:
- Extending the length of the lease to cover the time lost
- Distributing the lost rental income across the entirety of the remaining lease period
- Increasing rents in future to make up for any loss.
Tenants and landlords must discuss these options and agree on the future arrangements of the lease.
If you are affected by this change then you should seek advice at the earliest opportunity. To find out more about our services and support, please contact us.