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Support 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 (SBBR), 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.

Eligibility

You are eligible if:

  • your business is based in England
  • you are a small business and already receive SBBR and/or RRR
  • you are a business that occupies property

How to access the scheme

You do not need to do anything. Your local authority will write to you if you are eligible for this grant.

Guidance for local authorities on the scheme will be provided shortly.

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

Find your local authority.

Support for businesses that pay business rates

Business rates holiday for retail, hospitality and leisure businesses

We will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.

Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.

Eligibility

You are eligible for the business rates holiday if:

  • your business is based in England
  • your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied hereditaments 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 & boarding premises and self-catering accommodation

How to access the scheme

There is no action for you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.

You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator.

Further guidance for local authorities is available in the expanded retail discount guidance.

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.

For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.

For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000.

Eligibility

You are eligible for the grant if:

  • your business is based in England
  • your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied hereditaments 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

You do not need to do anything. Your local authority will write to you if you are eligible for this grant.

Guidance for local authorities on the scheme will be provided shortly.

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

Find your local authority.

Support for businesses who are paying sick pay to employees

We will bring forward legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:

  • this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
  • employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as of 28 February 2020
  • employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
  • employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website
  • eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
  • the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible

Eligibility

You are eligible for the scheme if:

  • your business is UK based
  • your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020

How to access the scheme

A rebate scheme is being developed. Further details will be provided in due course once the legalisation has passed.

Support for businesses through deferring VAT and Income Tax payments

We will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.

VAT

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.

Eligibility

All UK businesses are eligible.

How to access the scheme

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Income Tax

For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.

Eligibility

If you are self-employed you are eligible.

How to access the scheme

This is an automatic offer with no applications required.

No penalties or interest for late payment will be charged in the deferral period.

HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.

Support for businesses through the 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 otherwise have been laid off during this crisis.

Eligibility

All UK businesses are eligible.

How to access the scheme

You will need to:

  • designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
  • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan.

Chancellor Rishi Sunak told Britons they will not face the coronavirus crisis ‘alone’ tonight as he unveiled a huge new coronavirus bailout. He said the government will cover 80 per cent of salaries up to £2,500 a month, with workers staying on the books of employers, and there will be no limit on the total cost. The scheme will be up and running by April 1.

‘For the first time in our history the government is going to step in and help pay people’s wages,’ he said. The massive rescue package was unveiled by Mr Sunak and Boris Johnson at a press conference in Downing Street after furious complaints that they were not doing enough for ordinary people.

IR35 delay added to £330bn virus aid package

Chancellor Rishi Sunak joined the Prime Minister at Tuesday’s Downing Street press briefing to overhaul his £30bn Budget support package just six days after delivering it.

“I promised to do whatever it takes to support our economy through this crisis – and that if the situation changed, I would not hesitate to take further action. That is what I want to begin doing today,” said Sunak.

As well as enhancing and extending many of the measures announced last week, Chief Secretary to the Treasury, Steve Barclay announced in the House of Commons that the government was delaying the roll-out of the new private sector IR35 regime until 1 April 2021.

While a total of £350bn has been committed to support businesses and individuals, the IR35 delay came in response to growing calls for the government to offer support to the self-employed and freelances.

All change for landlords

Make sure you’re aware of new CGT requirements and finance cost restrictions for residential properties.

Capital gains tax (CGT)

For UK residents, there is another change in payments of CGT for disposals made on or after 6 April 2020. Return and payment of CGT has to be paid within 30 days following the completion day for UK land (including buildings) when there is a charge to CGT. This change may cause a substantial cashflow difficulty for landlords in the short term.

If your client is already within self-assessment and has to complete one, you will need to ensure that the gain is also included on their self-assessment tax return; HMRC will be amending the self-assessment return to allow you to do this.

How to calculate capital gain on disposal of residential property:

The self-assessed calculation of the amount payable on account takes into consideration unused losses brought forward or in the same tax year and the person’s annual exempt amount, whereas any anticipated losses on future disposals cannot be taken into account. The rate of tax for individuals is determined after making a reasonable estimate of the amount of taxable income for the year.

Once the provisional calculation has been submitted and the tax paid, it cannot be reduced (for example, because your client made a capital loss later in the year) until the client submits their self-assessment return. Failing to meet deadlines for submission and payment will trigger penalties.

The provisions are contained in Schedule 2 of Finance Act 2019. Some of the main points are as follows:

  1. These changes to capital gains tax apply to the following (subject to some limited exclusions). Schedule 2 Part 1 1(1) states that the schedule applies to:
  1. ‘Any direct or indirect disposal of UK land which meets the non-residence condition (whether or not a gain accrues) and which is made on or after 6 April 2019, and
  2. Any other direct disposal of UK land on which a residential property gain accrues and which is made on or after 6 April 2020.’

CGT payable on residential property and carried interest is 18% and 28% as opposed to normal capital gain tax rate of 10% and 20% respectively for basic and higher rate taxpayers.

As highlighted within Agent Update March 2020, ‘To enable customers to report and pay any CGT liability arising from gains on the sale of a property HMRC are developing a new digital service accessible from GOV.UK, which will be available from April 2020 to make it easier for customers to report and pay their CGT property disposal liability.’

Finance cost restrictions

Since 6 April 2017, landlords are no longer able to deduct all of their finance costs from their property income to arrive at their property profits. Instead, they receive a basic rate reduction from their income tax liability for their finance costs. Year to 5 April 2020 will be the final year when 25% of finance cost is allowed in full, whereas 75% of the finance cost is used as a tax reducer. From 6 April 2020 no finance cost is deductible when computing property income and losses, and 100% finance cost is used a tax reducer.

Finance costs include mortgage interest, interest on loans to buy furnishings and fees incurred when taking out or repaying mortgages or loans. No relief is available for capital repayments of a mortgage or loan. You may find these examples useful for understanding how do these changes impact on your client’s tax position.

The following won’t be affected by the introduction of the finance cost restriction: 

  • UK resident companies
  • non-UK resident companies
  • landlords of furnished holiday lettings.

 This rate restriction pushes more landlords into the higher rates of tax and make the renting properties business uneconomical.

No further changes to capital allowances

Main change sees an increase of 1% for structures and buildings allowance.

Structures and buildings allowance

As previously announced the annual rate of capital allowances available for qualifying investments on or after 29 October 2018 to construct new, or renovate old, non-residential structures and buildings will increase from 2% to 3%.

The change will take effect from 1 April 2020 for corporation tax and 6 April 2020 for income tax. Businesses whose chargeable period spans 1 April (corporation tax) or 6 April (income tax), may claim 2% per year for days in that period before the operative date and 3% for days thereafter.

Capital allowances for business vehicles

The government previously announced that it is consulting on bringing forward to 2035 the ending of sales of new petrol, diesel and hybrid cars and vans.

To encourage businesses to purchase more environmentally friendly (lower CO2 emission) vehicles, the availability of First Year Allowances (FYAs) has been extended to April 2025 (this was due to come to an end from April 2021).

100% FYAs will continue to apply for business cars acquired from April 2021 with CO2 emissions of 0g/km (pure electric vehicles).

Business cars with CO2 emissions up to 50g/km will be eligible for WDAs at the main rate of 18% while cars with CO2 emissions over 50g/km will be eligible for WDAs at the special rate of 6%.

The new 50g/km threshold will also apply for determining the lease rental restriction of 15% of the costs of hiring business cars.