Below is a roundup of changes to government support information generally and for businesses, employers and the self-employed.
NHS Test and Trace in the workplace
Guidance on what to do if you or someone you employ is contacted by NHS Test and Trace, including self-isolation, sick pay and financial support has been updated. All employers should keep up to date with this guidance.
Exemption from National Insurance contributions for COVID-19 Test and Trace Support Payments – England
This measure disregards payments made under the Test and Trace Support Payment Scheme in England to employees who are on a low income and have been asked to self-isolate by NHS Test and Trace (NHSTT) so that payments made under the scheme will not be liable to employer or employee Class 1 National Insurance contributions. Employers will also not be liable to Class 1A National Insurance contributions in respect of the payments.
The Test and Trace Support Payment Scheme was piloted in Blackburn with Darwen, Pendle and Oldham from 1 September 2020.
On 20 September 2020, the government announced that from 28 September 2020 the pilot would be adapted and rolled out across England. People on low incomes who have tested positive for coronavirus (Covid-19) or have been told by NHSTT to self-isolate, that cannot work from home and have lost income as a result would be supported by a Test and Trace Support payment of £500. This lump sum payment aims to provide additional financial support to those on low incomes so they can self-isolate and help stop the spread of the coronavirus.
Getting tested for Coronavirus
Guidance on coronavirus testing, including who is eligible for a test and how to get tested, has been updated to help people find a pharmacy where they can collect rapid tests and find a test site where they can collect rapid tests. See: Coronavirus (COVID-19): getting tested - GOV.UK (www.gov.uk)
New scheme to give people in problem debt breathing space launched
Hundreds of thousands of people struggling with debt problems will be supported through a new debt respite scheme that was announced 4 May 2021. Around 700,000 people struggling with problem debt to benefit from Breathing Space this year as the scheme will give those facing financial difficulties 60 days to get finances back on track – without debts piling up, worrying letters or enforcement action.
People will also have access to professional debt advice, with stronger protections for people in mental health crisis treatment.
Under the scheme, people will be given legal protections from their creditors for 60 days, with most interest and penalty charges frozen, and enforcement action halted. They will also receive professional debt advice to design a plan which helps to get their finances back on track.
Recognising the link between problem debt and mental health issues, these protections will be available for people in mental health crisis treatment – for the full duration of their crisis treatment plus another 30 days.
People across England and Wales who are struggling to repay their debts could be eligible, and the Government expects 700,000 people to benefit in the first year of the scheme.
See: New scheme to give people in problem debt breathing space launched - GOV.UK (www.gov.uk)
HMRC have issued guidance on the three year carry back of losses
In his Spring Budget the Chancellor announced a temporary 3 year carry back of trading losses for limited companies and unincorporated traders instead of the normal one year carry back. This will potentially allow loss making businesses to obtain a refund of tax paid in those years.
The latest Finance Bill includes the legislation to implement these changes and HMRC have recently issued guidance on how the rules operate.
For unincorporated businesses, the extension applies to a maximum £2,000,000 of unused trading losses made in each of the tax years 2020/21 and 2021/22.
For corporation tax the new rules apply to accounting periods ending between 1 April 2020 and 31 March 2021. The £2,000,000 maximum applies separately to unused trading losses made by companies, after carry-back to the preceding year.
The £2,000,000 cap is subject to a group-level limit, requiring groups with companies that have capacity to carry back losses in excess of £200,000 to apportion the cap between member companies.
See: Extended Loss Carry Back for Businesses - GOV.UK (www.gov.uk)
Help and support if your business is affected by coronavirus (COVID-19)
You can watch videos and register for the free webinars to learn more about the support available to help you deal with the economic impacts of coronavirus here:
Help and support if your business is affected by coronavirus (COVID-19) - GOV.UK (www.gov.uk)
Coronavirus Job Retention Scheme (CJRS)
Employers can now submit CJRS claims for periods in April. These must be made by Friday 14 May.
CJRS eligibility from May
If you have employees who have previously been ineligible for the CJRS, as they were not on your payroll on 30 October 2020, they may be eligible for periods from 1 May 2021 onwards.
From May you will be able to claim for eligible employees who were on your PAYE payroll on 2 March 2021. This means you must have made a PAYE Real Time Information (RTI) submission between 20 March 2020 and 2 March 2021, notifying HMRC of earnings for that employee.
You and your employees do not need to have benefitted from the scheme before to make a claim, as long as you meet the eligibility criteria. For more information on eligibility, search 'check if you can claim for your employees’ wages' on GOV.UK.
Please contact us for help in submitting your claims, we will continue to support our clients in processing claims until the end of the scheme.
Coronavirus Job Retention Scheme (CJRS) - Other types of employees you can claim for
The guidance on contractors engaged with the public sector, or by a medium or large-sized organisation, in scope of off-payroll working (IR35) rules has been updated.
You can claim other types of employees - as long as they’re paid via PAYE. These employees include:
- office holders (including company directors)
- salaried members of Limited Liability Partnerships (LLPs)
- agency workers (including those employed by umbrella companies)
- limb (b) workers
- contingent workers in the public sector
- contractors with public sector engagements in scope of IR35 off-payroll working rules (IR35)
Individuals who are paid through PAYE but not necessarily employees in employment law, can continue to be furloughed from 1 July as long as you have previously submitted a claim for them for a furlough period of at least 3 weeks between 1 March and 30 June and submitted a claim for this by 31 July.
See: Other types of employees you can claim for - GOV.UK (www.gov.uk)
There is also updated guidance for other types of employees you can claim for and if your employee is clinically vulnerable.
See: Check which employees you can put on furlough to use the Coronavirus Job Retention Scheme - GOV.UK (www.gov.uk)
Paying back VAT deferred due to coronavirus
Information has been added on penalties or interest that may be charged if you do not pay in full, or make an arrangement to pay, and how you may still be able to avoid these charges.
The webpage below details how to pay VAT payments deferred between 20 March and 30 June 2020. You can pay now or join the VAT deferral new payment scheme.
If you deferred VAT payments due between 20 March 2020 and 30 June 2020 you can:
- pay the deferred VAT in full now
- join the VAT deferral new payment scheme – the online service is open between 23 February 2021 and 21 June 2021
- contact HMRC on 0800 024 1222 by 30 June 2021 if you need extra help to pay
You may be charged a 5% penalty or interest if you do not pay in full or make an arrangement to pay by 30 June 2021.
Pay your deferred VAT in full
If you were unable to pay in full by 31 March 2021, you may still be able to avoid being charged penalties or interest by either:
- joining the new payment scheme by 21 June 2021
- paying your deferred VAT in full by 30 June 2021
Join the VAT deferral new payment scheme
The VAT deferral new payment scheme is open from 23 February 2021 up to and including 21 June 2021.
The new scheme lets you:
- pay your deferred VAT in equal instalments, interest free
- choose the number of instalments, from 2 to 11 (depending on when you join)
Instalment options available to you
When you decide to join the scheme will determine the maximum number of instalments that are available to you.
The following table sets out the monthly joining deadlines (to allow for Direct Debit processing) and the corresponding number of maximum instalments (including the first payment):
If you join by
Number of instalments available to you
19 March 2021
21 April 2021
19 May 2021
21 June 2021
How to join
Before joining, you must:
- have your VAT registration number
- create your own Government Gateway account (if you do not already have one)
- submit any outstanding VAT returns from the last 4 years – otherwise you’ll not be able to join the scheme
- correct errors on your VAT returns as soon as possible
- make sure you know how much you owe, including the amount you originally deferred and how much you may have already paid
To use the online service, you must:
- join the scheme yourself, your agent cannot do this for you
- still have deferred VAT to pay
- be up to date with your VAT returns
- join by 21 June 2021
- pay the first instalment when you join
- pay your instalments by Direct Debit (if you want to use the scheme but cannot pay by Direct Debit, there’s an alternative entry route for you)
Join the scheme now
See: Pay VAT deferred due to coronavirus (COVID-19) - GOV.UK (www.gov.uk)
Penalties for overclaimed SEISS grants
Claims for the fourth Self Employed Income Support Scheme (SEISS) can now be made and must be claimed by 1 June 2021. At the same time, HMRC have issued updated details of penalties that may be imposed on those that have previously claimed too much.
If you have overclaimed a SEISS grant and have not repaid it, you need to notify HMRC within the notification period. The notification period ends on the latest of:
- 20 October 2020
- 90 days after you receive the SEISS grant you’re not entitled to
HMRC may charge you a penalty if you do not tell them within the notification period that you’re chargeable to Income Tax on an overclaimed SEISS grant.
When deciding the amount of any penalty, HMRC take account of whether you knew you were entitled to the SEISS grant:
- when you received it
- when it became repayable or chargeable to tax because your circumstances changed
If you knew you were not entitled to your grant and did not tell HMRC within the notification period, the law treats your failure as deliberate and concealed. This means HMRC can charge a penalty of up to 100% on the amount of the SEISS grant that you were not entitled to receive or keep. The penalty can be mitigated if the taxpayer assists HMRC in establishing the facts.
If you did not know you were not entitled to your grant when you received it, HMRC will only charge you a penalty if you have not repaid the grant by 31 January 2022.
See: Penalties for not telling HMRC about Self-Employment Income Support Scheme grant overpayments - CC/FS47 - GOV.UK (www.gov.uk)
Other Coronavirus Support Grants Overclaimed
If you have received a coronavirus support payment that you are not entitled to, you must tell HMRC about this by the end of the notification period. If you do not do this, HMRC call this a ‘failure to notify’.
The notification periods are:
Eat Out to Help Out Scheme – 90 days after the date you received the amount you were not entitled to
Coronavirus Job Retention Scheme – 90 days after the date you received the amount you were not entitled to, or after you ceased to be entitled to retain the amount you were paid, which could be because
- of a change in your circumstances
- you have not used the payment to pay the costs it was intended to reimburse, within a reasonable period of time (for example, to pay your staff)
As with SEISS grant overclaims, the maximum penalty could be as much as 100% of the amount of grant overclaimed. See HMRC guidance:
See: Penalties for not telling HMRC about coronavirus (COVID-19) support scheme overpayments - CC/FS11a - GOV.UK (www.gov.uk)
Recovery Loan Scheme update
The Recovery Loan Scheme supports access to finance for UK businesses as they grow and recover from the disruption of the COVID-19 pandemic.
Up to £10 million is available per business. The actual amount offered, and the terms are at the discretion of participating lenders.
The government guarantees 80% of the finance to the lender. As the borrower, you are always 100% liable for the debt.
The scheme is open until 31 December 2021, subject to review.
Loans are available through a network of accredited lenders, listed on the British Business Bank’s website.
You can apply for a loan if your business:
You need to show that your business:
- would be viable were it not for the pandemic
- has been adversely impacted by the pandemic
- is not in collective insolvency proceedings (unless your business is in scope of the Northern Ireland Protocol in which case different eligibility rules may apply)
Business that received support under the earlier COVID-19 guaranteed loan schemes are still eligible to access finance under this scheme if they meet all other eligibility criteria.
Who cannot apply
Businesses from any sector can apply, except:
- banks, building societies, insurers and reinsurers (but not insurance brokers)
- public-sector bodies
- state-funded primary and secondary schools
What you can get
- term loans or overdrafts of between £25,001 and £10 million per business
- invoice or asset finance of between £1,000 and £10 million per business
No personal guarantees will be taken on facilities up to £250,000, and a borrower’s principal private residence cannot be taken as security.
How long the loan is for
The maximum length of the facility depends on the type of finance you apply for and will be:
- up to 3 years for overdrafts and invoice finance facilities
- up to 6 years for loans and asset finance facilities
How to apply
Find a lender accredited to offer Recovery Loans from the list on the British Business Bank website: Recovery Loan Scheme: current accredited lenders - British Business Bank (british-business-bank.co.uk)
Understanding the possession action process: guidance for landlords and tenants
Guidance for landlords and tenants in the private and social rented sectors to explain the possession action process in the county courts in England and Wales has been updated to reflect new processes for landlords to reactivate a possession claim after 30 April.
See: Understanding the possession action process: guidance for landlords and tenants - GOV.UK (www.gov.uk)
Guidance for landlords, tenants and local authorities – England
Non-statutory guidance for landlords, tenants and local authorities in the private and social rented sectors in the context of Coronavirus (COVID-19) has been updated.
See: COVID-19 and renting: guidance for landlords, tenants and local authorities - GOV.UK (www.gov.uk)
Companies House (CH) update
You can use a same day service to electronically file a change of company name or incorporate a company (software filing only). You must apply before 11am. If you apply after 11am, your application will not be processed until the next working day. CH have suspended all other same day services until further notice.
See: Coronavirus guidance for Companies House customers - GOV.UK (www.gov.uk)
Guidance for food businesses
This has been updated for allowing hospitality businesses to serve food outdoors. Added information on ventilation and asymptomatic testing programmes is now also included.
This guidance is intended for all workplaces involved in the manufacturing, processing, warehousing, picking, packaging, retailing and service of food. This also includes important information about the risk of community transmission of coronavirus (COVID-19) from circumstances or activities related to the workplace such as transportation and accommodation arrangements. This guidance is of general nature and is intended to be compatible with the relevant health and safety legislation, please note that if there appears to be a conflict between this guidance and the relevant health and safety legislation, the latter shall prevail.
See: Guidance for food businesses on coronavirus (COVID-19) - GOV.UK (www.gov.uk)
Revenue and Customs Brief 4 (2021): partially exempt VAT registered businesses affected by coronavirus (COVID-19)
This brief outlines an accelerated process for VAT registered businesses to request temporary alterations to their partial exemption methods (including combined methods) to reflect changes to their business practices because of the coronavirus (COVID-19) pandemic.
Businesses who make a mixture of taxable and exempt supplies can only recover input tax to the extent that it is used in making taxable supplies. Residual input tax (VAT incurred on purchases used to make both taxable and exempt supplies) must be apportioned using a fair and reasonable method to calculate the percentage which is recoverable.
The standard method, based on the value of taxable supplies made as a proportion of all supplies made by the business, is the default method. A Partial Exemption Special Method (PESM) may, however, be used if HMRC is satisfied that it would produce a fairer reflection of the use of residual input tax than the standard method. Proposed PESMs must be approved by HMRC before they can be used.
Businesses using the standard method may, in any given tax year, find that their actual deductible input tax differs significantly from that calculated based on the use of input tax in making taxable supplies. Where this difference exceeds £50,000, or 50% of the residual input tax and £25,000, they must account for the difference between the 2 amounts by applying the standard method override.
A special method override may be required when an existing PESM is found to be unfair. A business can serve a Special Method Override Notice on HMRC, or HMRC can serve one on the business.
HMRC will be using an accelerated process to make sure coronavirus-related changes to partial exemption methods are considered, and where appropriate, approved swiftly.
Requests for such changes should be sent to the email address: PESMcovid19@hmrc.gov.uk.
All PESM requests must be accompanied by a declaration that the method proposed is fair and reasonable. An example of the format this should take is available in appendix 1 of Partial Exemption (VAT Notice 706).
Where we are satisfied that the aim of the proposal is to address coronavirus issues only, in order to facilitate a quick decision, HMRC will restrict its enquiries to how that proposal addresses those issues. Where there may be significant risk that the remainder of the existing method produces an overall result which is not fair and reasonable, further examination of that method will be considered.
HMRC will apply normal scrutiny to method requests where there is a risk the accelerated process is being used to increase recovery for businesses whose activities have not been directly affected by coronavirus.