Hi Last night we FINALLY had some meaningful support from Sunak for the 5 million self-employed people in the UK who have been impacted by Coronavirus. I know this is something you are very interested in - we had text messages coming through to Blue Penguin HQ from clients even before the chancellor had finished speaking! [That's fine, by the way👍]. There have also been some smaller updates and other measures announced, and we'll write about those separately on Sunday. For now, I will concentrate on support for the self-employed, and also updates in respect of the 80% grant for furloughed employees, which I know is also at the forefront for those with larger businesses. Self-Employed Income Support Scheme (SEISS) What is it? In short - a grant of 80% of your average monthly trading profits over the last three tax years. If you haven't been trading for three years, it'll be the average of 17/18 and 18/19, or just 18/19 accordingly. The grant will be capped at £2,500 per month, and (currently) available only for three months. The maximum claim is therefore £7,500. The grant will be taxable as income in your 2020/21 tax return. This appears reasonable as it is designed to replace lost income which would be equally taxable. Am I self-employed? This is worth clarifying. If you trade under your own name, YES. If you run a Limited Company and you're the Director, then you are not self-employed I'm afraid. Rental profits are also not self-employment. Support for director-shareholders has been shockingly absent so far. We await guidance on whether Directors qualify for the Job Retention Scheme - see below. This relief will only apply to those who trade under their own name with an unincorporated business OR trade through a partnership structure. Those under the CIS scheme are self-employed. Please call if you'd like clarity on your own position. What are the main qualifying criteria? Hold on to your hats. This isn't going to be available for everyone: - You must have been self-employed in 2018/19 - You must still be trading (or intend to continue trading) - Average trading profits* in the last three tax years must be LESS THAN £50,000pa - Trading profits must equal MORE THAN 50% of your total income for the same period. - Unlike the 'furlough' for employees, you don't have to stop work to be eligible. - And finally, you must have lost profits due to Coronavirus This last point is interesting. For most businesses, it goes without saying. But for those who are managing as normal and still claim the grant, I suspect there will be some sort of clawback when their 2020/21 tax return is filed. * For tax bores amongst you (🙋♂️) we have heard the phrases "trading profits" and "taxable profits" used interchangeably by the media. They are slightly different things. It's possible some clients have trading profits over £50K but taxable income below it - and vice-versa. For most, however, this won't affect eligibility. What if I started my business in 2019/20? Currently...nothing here to help you 😢. But, you can still claim other support already announced, such as the Business Interruption Loan and/or Universal Credit as required, plus taking steps to reduce your outgoings in the short term. Give me a call to chat through the other options. When and How do I get this? Because HMRC already have your tax return on file, they will write to everyone who meets the criteria and invite you to make an application. Sunak said he hoped the scheme would be available in early June as they need to build it from scratch. That's a long way away - in the meantime please speak to me about short-term options available to tide you over. Crucially, you will make the claim via the gov.uk website ONLY. Please BEWARE OF SCAMS which no doubt will prey on the most desperate ahead of June. 80% Grant for Furloughed Workers - An Update For businesses with employees, there has been little further guidance since the scheme was announced last week. I've been asked some very valid questions which we just don't have the answers to right now. And, frankly, I suspect neither will the govt for a few weeks. We have been speaking to the ICAEW (the professional body for Chartered Accountants) who have set out their understanding as of last night on some of the biggest questions we're being asked: Exactly how much will HMRC pay us? The grant will be the LOWER of 80% of the employee's normal salary OR £2,500. This excludes bonus/commissions. The 'normal salary' will be the average for 2019/20 to date, or March 2019, whichever is higher. PLUS, on top of this HMRC will also reimburse any Employer's NIC suffered and the minimum pension contribution cost, if applicable. So this 80% thing...we pay the staff 80% or HMRC pay us 80%?? This is becoming (a bit) clearer. When you furlough staff, you might mutually agree to pay them a lower amount than normal. HMRC will reimburse up to 80% of their normal salary (i.e. NOT their furloughed salary) - so if for example, you agree to pay them 90% of normal salary in furlough, you will still only reclaim 80%. But if you pay 80% of normal salary then, in theory, there would be no overall cost to your business for keeping them furloughed rather than redundancies. What you pay and what you claim back are legally separate - you cannot simply tell staff "we'll pay you 80% because that's what we can reclaim". So I'd recommend ANY changes to their basic salary are agreed in writing. We're not lawyers but let me know if you would like a template letter to help you with this. At the moment there appears to be a loophole where if you agreed to pay, say, 50% of salary to furloughed staff you could actually still claim 80% from the govt, and pocket the 30%. We expect this to be tied off when the legislation is published so don't get too excited. Can staff do any work for me whilst they are furloughed? No. They can't do anything which is "making money for, or providing services to your employer". One exemption is where an employee is able to complete a training course from home, or keeping their CPD up to date, they would be permitted to do this. What if 80% takes staff below the National Minimum Wage? Luckily the guidance here is clear: it only applies to hours they are working. This would include studying from home. For most firms, this is unlikely to be an issue. What about new starters? Sorry. It only applies to employees on the payroll on 28th February 2020. Will payments during furlough be taxable? Yes - all payments will be subject to Income Tax and NIC deductions as normal. Can I wait until I receive the rebate from HMRC before I pay my staff? Probably not - you still need to pay your staff in line with their contractual agreement. By mutual written consent, you could agree to defer payment until the grant is received, but we'd advise you consult an HR expert before doing this. Please let me know if you'd like me to put you in touch with someone You'll still need to process payroll with the agreed amounts, and if for any reason the grant did not materialise or was denied, you would still be liable to pay the staff. When and How do I get this? Believe me, you'll be the FIRST to know when the reclaim system goes live! At the moment we are told it'll be the end of April. One thing you can do in the meantime is making sure you have - and can access - your Government Gateway as we expect this will be the portal used to make your claim. Here's the link: https://www.access.service.gov.uk/login/signin/creds Setting this up can take two weeks as HMRC need to send your activation code in the post. You do NOT want to have to wait a further 2 weeks after the system goes live to claim any refunds, so I would urge you to check on this right now. Finally, A Reminder: Please click here to see the archive of previous CV19 emails, in case you've just joined us. Remember WE NEED YOUR HELP - we want to hear real-world experiences of the reliefs available and access to new finance, so we can build a map of how things are rolling out across the UK. Have you heard from your local council about the rates relief grant? Have you had a good/bad/indifferent experience in getting a mortgage holiday from your lender? Are suppliers being lenient with payment terms? If you'd like to book a call FREE OF CHARGE to discuss any of the above, or how your business has been affected in general, we've set up a dedicated appointment you can book here: https://calendly.com/blue-penguin/coronasupport In the meantime, stay safe, stay tuned and for goodness' sake stay indoors if at all possible. Peter and the Blue Penguin team. 💙Smallprint: this is a massively fluid situation. The above is our understanding right now, but things are changing daily. Please don't take any of this as legal advice, yada yada. We'll do our best to keep you up to date with more information as we get it. Please call us for clarification on any points above. | 
