Fourth Self Employment Income Support Grant Now Available
This week, EY item Club has improved its estimate of the UK’s economic performance in 2021 – and forecasts a rebound in growth over the next two years and predicts a return to growth for summer 2021 with GDP to rise by 5% in 2021 and 6.5% in 2022. See: How the UK economy can stay resilient into the post-pandemic future | EY UK
The bad news is that Government borrowing hits record high. The cost of dealing with Covid-19 has meant UK borrowing is at its highest level since the Second World War. Public sector borrowing reached £303 Billion in the year to March the Office for National Statistics have reported. This borrowing will need to be addressed at some point in the near future and now may be a good time to take some time and plan a business strategy to keep you and your business flexible and resilient to changes in government taxation policy. We cannot foresee the future, but we do know the best way to predict the future is to create it!
Please talk to us about our business and cash flow planning services which our most successful clients take advantage of.
Self-Employment Income Support Scheme (SEISS)
The online service for the fourth grant is now available. The Self-Employed Income Support Scheme (SEISS) has been extended to September 2021 and details of claims for the fourth grant have now been released. This fourth grant covers February, March and April 2021. There will then be a fifth grant covering May to September 2021.
The latest grant allows the self-employed to claim 80% of their average profits for the period up to 2019/20 and is again limited to £2,500 a month.
Like CJRS there are lots of conditions that need to be satisfied, such as being self-employed in 2019/20 and continuing to trade in 2020/21 or would be doing so if it the business had not been impacted by coronavirus.
In order to be able to make a successful claim, the self-employed profits in 2019/20 must not exceed £50,000 and must be more than 50% of the individual’s total income. If that test is not met, then the same £50,000 and 50% tests are applied to average profits and total income over the four years (or shorter period) to 5 April 2020. This means that those who commenced trading in 2019/20 will now potentially be eligible for SEISS grants, having not previously qualified for the first three grants.
Although we cannot make the claim on your behalf, we can help you determine whether you are eligible and assist you with your claim if required.
Conditions for the fifth grant will be linked to a reduction in business turnover. Self-employed individuals whose turnover has fallen by 30% or more will continue to receive the full grant worth 80% of three months’ average trading profits, capped at £7,500. People whose turnover has fallen by less than 30% will receive a 30% grant, capped at £2,850. We are still awaiting further details of the fifth grant calculation.
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.
There is also updated guidance for other types of employees you can claim for and if your employee is clinically vulnerable.
Employees can continue to claim tax relief if working from home
Employees can be paid £6 a week tax free Home Working Allowance whilst working from home. The amounts are free from income tax and Class 1 national insurance contributions (‘EEs and ‘ERs). The normal rule to take advantage of this exemption is that the employee is required by their employer to work from home from time to time and is normally not available where the employee works from home as a matter of choice.
£6 a week tax free for a higher rate taxpayer is equivalent to £538 gross pay (after 40% income tax and 2% employee NICs). The employer would also save 13.8% NICs.
This rule was temporarily relaxed due to the COVID-19 pandemic for 2020/21. HMRC have advised that as long as an employee has been required to work from home at some point during 2020/21 as a result of the COVID19 pandemic they will accept a claim for home-working for the whole 2020/21 tax year. This has now been extended to 2021/22 up until the end of the pandemic.
Where the employer does not pay the allowance, the employee may make a claim for a deduction of £6 a week from their earnings and this has also been extended to 2021/22. That would result in a tax refund of £124.80 for a higher rate taxpayer.
The quickest way to make a claim is to use the HMRC online claims service which requires the employee to set up a Government Gateway account. Alternatively, employees should use HMRC form P87 to make their claim.
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.