Although the main furlough scheme is being wound down, there remain a number of government support measures in place relating to both Covid-19 and the country’s economic recovery.
Three of these which are currently topical and worth sharing more widely are the subject of this article.
Fifth self-employment (SEISS) grant
Those who may be eligible for this grant should have been contacted by HMRC recently, with the claims service due to open by the end of July.
HMRC will again do much of the calculation of the amount of the grant for those who are eligible, but the claims process is much more complicated this time around because this grant is payable at two different rates depending on how much the business suffered during the period April 2020 – March 2021. Self-employed individuals will once again have to make the claim themselves, but we will be able to assist our clients with making the necessary calculations.
Those who are invited by HMRC to make a claim for the grant (because the trading in 19/20 and 20/21, and profits criteria have been met), will need to assess their eligibility. To be eligible, you must:
- Intend to continue your business during the 2021/22 tax year, and
- Reasonably believe there will be a significant reduction in your trading profits due to the impact of COVID-19 between 1 May 2021 and 30 September 2021
The second of these two criteria should be given some thought by many businesses, particularly those in the hospitality and domestic tourism sectors.
The Self Employment Income Support Eligibility guidance can be found on the HMRC website
In the link above, HMRC indicates that profitability from May to September should be considered as a whole. Businesses in these sectors, in particular, are likely to have been adversely affected in early May, before the reopening of much of the economy, but in some cases will be more profitable than usual over the summer as a whole. If this is a possibility then the advice would be to delay claiming the grant from a few weeks until it is clearer whether or not profitability will be affected; claims can be made at any point up to 30th September.
Equally, it is possible that a return of restrictions could mean that businesses that do not currently believe that they would be eligible, become eligible as new restrictions depress demand. Again these businesses have until 30th September to claim the grant.
Two Profit based rates
The grant is payable at two rates, either 30% or 80% of three months profits. HMRC will calculate 30% or 80% of profits for three months, but taxpayers are required to calculate whether they are eligible for the grant at the lower (30%) or higher (80%) rate.
The higher rate of 80% of profits is payable to businesses where turnover (not profits) dropped by more than 30% as a consequence of Covid-19, or where the business commenced in 2019/20. All other eligible businesses will be paid the lower rate of 30% of profits.
The calculation of whether turnover has dropped by more or less than 30% is by reference to turnover in the period 6th April 2020 to 5th April 2021 (or if easier, 1st April 2020 to 31st March 2021) compared to that declared on your 2019/20 tax return. There are a small number of exceptions including for businesses where 2019/20 was not a representative year (HMRC give examples of businesses affected by the sole trade taking maternity, paternity, long term sick leave or losing a major contract), or where the turnover declared on your 2019/20 tax return was for a period other than 12 months. If this may affect you, please let us know.
Please do not hesitate to contact us if you would like to discuss further with us, if you need help with calculating your turnover for the year to 5th April (or 31st March) 2021, or if you need turnover figures from your previously submitted tax returns.
This is a government scheme to encourage businesses to take on 16-24-year-olds who are currently on Universal Credit and as such are deemed to be at risk of long term unemployment. Any business which takes on a qualifying individual can apply for government funding which covers:
- 100% of the National Minimum Wage (or the National Living Wage depending on the age of the participant) for 25 hours per week for a total of 6 months
- employer National Insurance contributions
- associated minimum automatic enrolment pension contributions
For further information, go to the
The new employee must be taken on before 31st December 2021 and the funding will last for six months, so up to 30th June 2022 for an individual starting on 31st December 2021. There is also further funding available for support and training to ensure that the individual on the scheme will remain employable and be able to get a job in the future.
In other words, the government could pay the entire wages (minimum wage) of a new employee for six months.
Find out more on the Kickstart Scheme for Employers
We would like to remind everyone that companies investing in new capital equipment can currently claim a tax deduction equal to 130% of the cost of the equipment (the “super-deduction”). This is a very valuable relief and will go a long way to reducing companies’ tax bills – it means that a piece of equipment costing £10,000 will not only be treated as fully tax-deductible, saving £1900 in tax but will also reduce the company’s tax bill by a further £570.
The super-deduction is available for purchases of most capital equipment including plant and machinery, office equipment and vans. The main exceptions are second-hand goods, cars, integral features (such as heating systems, electrical works) and new buildings. However integral features can still qualify for the annual investment allowance which has an annual limit of £1,000,000 until 31 December 2021. This means that almost all capital expenditure other than cars and buildings is currently tax-deductible in full, if not more.
The super deduction is available until 31st March 2023.
And finally, as a reminder, the furlough scheme will be changed again from 1st August 2021, and from that date will only pay 60% of a furloughed employee’s earnings up to a maximum of £1875 per month. The employer will have to pay 20% of wages as well as any employer national insurance or pension contributions. The furlough scheme is due to continue to pay at this new lower rate until 30st September 2021 at which date it is scheduled to be withdrawn.
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