Dear Payadvice.UK ,
I’m writing to you with the latest information about the financial support schemes available to help your clients, as part of the UK Government’s Plan for Jobs.
- the 21 June deadline for joining the online VAT deferral new payment scheme
- the Self Employment Income Support Scheme (SEISS)
- a reminder of the 14 July deadline for submitting June Coronavirus Job Retention Scheme (CJRS) claims
- details of changes to the CJRS from July.
To find out what other financial support may be available for your clients during this time, search ‘find coronavirus financial support’ on GOV.UK.
1. VAT deferral – final chance to join online
The VAT deferral new payment scheme is open for all businesses who deferred paying VAT due between 20 March and 30 June 2020, and were unable to pay in full by 31 March 2021.
The last day businesses can join this scheme is 21 June. If businesses join by this date they can apply to spread their payments across up to eight instalments.
If a business has deferred paying VAT and has not yet joined the VAT deferral new payment scheme, they may be charged a 5% penalty and/or interest if they do not join online by the deadline of 21 June or pay in full by 30 June.
They can join quickly and simply online without needing to call us. To find out more, including what your clients need to join online, go to GOV.UK and search ‘VAT deferral’.
If businesses are still unable to pay and need more time, they should contact us to make an alternative arrangement by 30 June – go to GOV.UK and search ‘if you cannot pay your bill on time’.
Thank you for continuing to support your clients with the Self-Employment Income Support Scheme. More detailed guidance will be published ahead of the scheme opening, but in the meantime, here are the latest SEISS updates, to share with your clients.
Calculating the fifth SEISS grant
The amount of the fifth grant will be determined by a turnover test, which details how much your clients’ turnover has reduced in the 2020-21 tax year compared to pre-coronavirus trading.
Your clients do not need to have submitted their 2020-21 Self Assessment tax return to be able to calculate their turnover to claim the fifth SEISS grant. However, you may want to encourage your clients to ensure their records are up to date so that turnover for the year April 2020 to April 2021 is readily available.
If your clients’ turnover reduced by 30% or more, they will receive a grant worth 80% of three months’ average trading profits (capped at £7,500). If their turnover reduced by less than 30%, they will receive a grant worth 30% of three months’ average trading profits (capped at £2,850).
Eligibility for the fifth grant
To be eligible, self-employed people (including members of partnerships) must:
- have submitted their 2019-20 tax return on or before 2 March 2021
- have trading profits that are no more than £50,000 and at least equal to their non-trading income, based on their 2019-20 tax return or an average of relevant tax years between 2016-17 and 2019-20
- declare that they intend to continue to trade and are either:
- currently trading but are impacted by reduced activity, capacity or demand due to coronavirus
- or have traded previously but are temporarily unable to do so due to coronavirus (if the only reason a customer is temporarily unable to trade is because they have to quarantine or self-isolate after going abroad, this does not meet the requirement).
- declare that they have a reasonable belief that there will be a significant reduction in their trading profits between May and September 2021 due to reduced business activity, capacity, demand or inability to trade due to coronavirus.
If your client previously heard from us that they were not eligible for the fourth grant, they will not be eligible for the fifth grant either. This is because the same tax returns have been used to determine eligibility for both grants.
If your clients are ineligible for SEISS, they may still be eligible for other UK Government support, including Restart Grants, the Recovery Loan scheme, business rates relief and other business support schemes. For more details, search ‘coronavirus support’ on GOV.UK.
SEISS pre-claim checks
To protect against error and fraud, we are continuing the work we carried out ahead of the fourth SEISS grant opening, by contacting up to 27,000 potentially eligible customers to undertake a pre-claim check before the fifth SEISS grant opens.
We will write to affected customers to let them know we’ll phone them on the number they provided in their 2019-20 Self Assessment tax return to check their identity and business activity.
Customers will need to provide one form of identity and three months’ worth of UK bank statements from the 2019-2020 tax year in order to claim under the SEISS scheme.
If your client has changed their telephone number and we are unable to reach them, they should contact us on 0800 024 1222, and we will update their records with the new telephone number and arrange for a call back. Please note, this 0800 number can only be used to provide us with a new telephone number. Our advisors will not be able to transfer customers to another department or talk to them about the letter they have received.
Please remember that as an agent, you’re not able to claim SEISS or submit these documents on your clients’ behalf, but do let them know that this contact is genuinely from HMRC. Customers can find more support on GOV.UK by searching ‘check genuine HMRC contact’. Customers can also search ‘scams’ on GOV.UK for information on how to recognise genuine HMRC contact and how to avoid and report scams.
Reporting SEISS grants on Self Assessment tax returns
SEISS grants are taxable and subject to self-employed National Insurance contributions, which means your clients need to report the grants on their tax returns.
We have received a number of 2020-21 tax returns where the first, second and third SEISS grants have been reported incorrectly, or not at all, causing delays in processing them. From 19 June, we’ll be automatically correcting returns and issuing a notice to you and your clients to tell you that we have done this. However, incorrect returns received before that date will need to be corrected by us separately; we’ll share details of any actions you or your clients need to take, as soon as we can.
If you have clients who are preparing their own tax returns, please help them to report their grant correctly to avoid delays. You can find more guidance on GOV.UK by searching ‘file your tax return early’. As a reminder, you and your clients should only use the following boxes to report their SEISS grants on their 2020-21 return:
- box 70.1 on the Self Employment (Full) page of the tax return
- box 27.1 on the Self Employment (Short) page of the tax return
- box 9.1 of the partnership supplementary pages of the tax return
- box 3.10A of the SA200 (Short) tax return.
We know that some customers are incorrectly reporting their SEISS grants as turnover, or ‘any other income’. Your clients should not report their SEISS grants in any other boxes than those listed above.
We are also aware that in some instances, your clients may not have told you that they have claimed a SEISS grant. If you are completing a Self Assessment tax return on behalf of your client, please make sure to ask them if they have claimed a SEISS grant, which then needs to be included on the tax return.
Paying back overpaid SEISS grants
If an amendment has been made to your client’s tax returns for 2016-17 to 2019-20 on or after 3 March 2021, you or they will need to check if their claim for the fourth SEISS grant has been affected. This requirement applies to claims for the fourth and fifth SEISS grants only.
Your clients can tell us if they need to pay back some or all of a SEISS grant by completing a simple form online. Your clients will not have to calculate the impact on the SEISS grant themselves as we will then contact them with details of how much they need to repay, and how to do this. More information can be found on GOV.UK by searching ‘pay back SEISS’.
3. Submit CJRS claims for June
CJRS claims for periods in June can now be submitted and must be made by Wednesday 14 July.
Employers can claim 80% of their furloughed employees’ usual wages for the hours not worked, up to a cap of £2,500 per month.
You can claim before, during or after your client’s payroll is processed. It’s best to encourage your clients to provide the exact number of hours their employees will work so you don’t have to amend the claim later.
Conditions of claiming CJRS grants
Please remind your clients that they must pay the associated employee tax and National Insurance contributions to HMRC. This is a condition of claiming the grant, and not doing so will mean they’ll need to repay the whole of the CJRS grant and they may not be able to claim future CJRS grants.
If your client is having difficulty paying any of their tax liabilities to HMRC, we can work with them to explore affordable payment options – for example, through a payment plan where they can pay in instalments. To find out more, go to GOV.UK and search ‘time to pay arrangement’.
Flexibly furloughing employees
If their business continues to be affected by coronavirus, employers don’t need to place all their employees on full furlough. They can also use the CJRS flexibly if they bring their employees back to work for some of their usual hours. They can claim a portion of their employees’ usual wage costs, but only for the hours spent on furlough.
Employers must not claim under the CJRS for any hours that their employees work. We are carrying out compliance checks to identify error and fraud in claims.
What you or your clients need to do now:
- If they haven’t submitted their claims for May but believe that they have a reasonable excuse for missing the deadline (14 June), check if they can make a late claim by searching ‘claim for wages’ on GOV.UK.
- Submit any claims for June no later than Wednesday 14 July.
- Keep records that support any CJRS grant amounts claimed, in case HMRC needs to check them.
- Make sure they‘re paying employee tax and National Insurance contributions to HMRC and contact us if they’re struggling to pay.
4. Changes to the CJRS from July
In July, the UK Government will pay 70% of employees’ usual wages for the hours not worked, up to a cap of £2,187.50. In August and September, this will reduce to 60% of employees’ usual wages up to a cap of £1,875.
Employers will need to pay the 10% difference in July, and 20% in August and September, so that they can continue to pay their furloughed employees at least 80% of their usual wages for the hours they do not work during this time, up to a cap of £2,500 per month.
Employers can still choose to top up their employees’ wages above the 80% level or cap for each month if they wish, at their own expense.
To help you and your clients plan ahead for future claim periods, the CJRS calculator is available to help you work out how much you can claim for employees up to the end of September. To find this and everything you need to know about the CJRS, search ‘Job Retention Scheme’ on GOV.UK.
5. Use our updated CJRS templates to make claiming for multiple employees easier
We’ve updated our claims process for employers who have 16 or more employees, making it easier to add their details. Different templates are available if you are claiming for between 16-99 employees, or for 100 or more employees.
If you or your clients were already using our previous template to claim for 100 employees or more, you can carry on using it. Third-party software incorporating this will still work.
You must enter all the information in the right format before uploading the completed template so that their claim is processed quickly and successfully.
We’ve also updated the process to help employers get their claim right first time and provide all the information needed so that their claims aren’t delayed or stopped. For example, if employers can’t provide a National Insurance number for an employee, you can now select a reason for this.
If you or your clients make a mistake, the template will highlight it to help you put it right before the claim is submitted. Please remind your clients not to change the format of the template before they submit it, as that won’t be accepted by our system.
You can find everything you need to help you make a claim, including our updated templates, by searching ‘claim for wages’ on GOV.UK.
6. Where can I get further support?
Many agents have benefitted from our webinars, which offer information on the CJRS and SEISS, other government support and how it applies to your clients. To book online, or to view updated guidance, go to GOV.UK and search ‘help and support if your business is affected by coronavirus’.
If you’re booked on a webinar but can no longer attend, please cancel your place to allow space for others to register.
There’s a list of monthly claims deadlines and a helpful step-by-step guide on GOV.UK, summarising the latest information on the CJRS and the steps you need to take to make a claim – you can find these by searching ‘Job Retention Scheme step by step guide’.
7. A word about scams
We are aware of recent increases in scams via phone calls, emails and texts. If someone contacts you or your client unexpectedly claiming to be from HMRC – possibly saying that you owe tax and face arrest, are due a tax refund, that your National Insurance number has been compromised or asking you to transfer money or give bank details – it’s likely to be a scam.
Search GOV.UK for our ‘scams checklist’ and to find out how to report tax scams. You can also access the National Cyber Security Centre’s new guide on how to stay secure online and protect yourself or your business against cybercrime by searching ‘Cyber Aware’.
I hope this information helps you and your business, and we’ll continue to keep you updated.
Chief Executive and First Permanent Secretary – HMRC