Tax service

More support for businesses affected by COVID

The Government has announced new measures designed to help small businesses affected by the ongoing coronavirus crisis, including a limited extension of the Self-Employment Income Support Scheme (SEISS). However, the scheme will be at a lower level than before.

Details of the latest developments to SEISS

  • The extension will start in November and last six months. Paid in the form of two taxable grants, the first will cover from the start of November to the end of January, and the second February until the end of April.
  • First grant will cover 20% of trading profits for three months, capped at £1,875. This will be paid in a single installment. The level of the second grant has yet to be set – the Government says this will happen “in due course”.

We’re not 100% sure of how trading profits are calculated in this latest extension. Under the current SEISS grants are based on your profits over three tax years, calculated from the average of your tax returns for 2016/17, 2017/18 and 2018/19. If you did not trade in 2016/17, it’s based on the average of 2017/18 and 2018/19. If you did not trade in 2017/18, the amount is based on 2018/19 only – even if you traded in 2016/17.

  • Only those eligible for the current SEISS scheme can apply. To be eligible you must have filed a tax return for 2018/19, must earn more than 50% of your total income from self-employment and your average trading profit must be no more than £50,000/yr.
  • You need to have been adversely affected by coronavirus to claim. This is a requirement of the current scheme. Adversely affected could be a reduction in pupils, trainer or other staff illness or extra PPE costs.

It’s not clear right now over exactly what period you’ll need to have been adversely affected in order to be eligible for each grant. We’ll update our advice when we hear more. As testing continues to be a source of concern and lockdowns impact pupil flow, it is our view that many trainers will be able to demonstrate they are eligible.

Remember the second round of SEISS grants is currently open and closes in November. Click here to find out more.

Other key developments

Self-assessment payments can be delayed further. Our DIA tax advisor is checking the detail on this but gives the following advice:

  • If you had a Payment on Account due for the Tax Year 2019/20 in July 2020, which you deferred under the previous extension given to January 2021, you are now entitled to defer this for a further period up to 31 January 2022.
  • In addition, if you have any balance of tax to pay for 2019/20, after taking into account the Payments on Account already made, you are also entitled to defer this until 31 January 2022.
  • So essentially, the next tax due will only hit in January 2022.
  • However, you should be diligent in putting money aside for the total tax due in January 2022, as for some it may have accumulated to a substantial sum.

Longer period to pay back Bounce Back Loans 

The Government has also announced a new ‘Pay As You Grow’ scheme which will give those who’ve borrowed Bounce Back Loans more flexibility in how they repay. The time you have to apply for a new Bounce Back Loans has also been extended. Here are the key points:

  • New AND existing Bounce Back Loans can now be repaid over 10 years (previously it was six). The first year is interest-free and the rest at 2.5%.
  • You can now take payment holidays and interest-only repayment periods on Bounce Back Loans. Again, this applies to new and existing loans. 
  • Application deadline extended to 30 November 2020. 

VAT deferral

Businesses can delay VAT payments under the ‘New Payment Scheme’. Rather than paying in full by March 2021, they will now be able to spread payments throughout the 2021-22 financial year.

Click here to find out more about coronavirus financial support for your business.

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