A large number of clients are asking us for help in understanding how the UK Government is going to support the employed, self employed & SME businesses during the coronavirus COVID-19 pandemic. The Prime Minister & Chancellor announced billions of pounds would be used to prevent businesses going under and support workers who have suddenly become unable to work.

Below is a helpful list of key points:

Salaried Employees - the Coronavirus Job Retention Scheme

• All registered employers in the UK are eligible via HMRC
• Government grants will cover 80 % of the salary of retained workers up to a total of £2,500 a month. Employer has to apply.
• This cover is for workers if employer is unable to pay, or are unable to work due to the coronavirus outbreak.
• Will become 'furloughed' and should not be working while under the scheme.
• Scheme will cover wages lost backdated to March 1, and applications will open before the end of April.
• Scheme will last until June 1, with potential to be extended & unlimited funds will be available.

For Self employed, contractors and freelancers

• Unfortunately  - No specific plan to compensate contractors, freelancers and self-employed.
• Chancellor advised those self employed affected by coronavirus to apply for the Universal Credit scheme, which has had its requirements and conditions changed for this crisis.
• Self-employed will not have to make the self assessment (tax return) payment on account that was due by 31 June 2020 now until 31.1.2021. This effectively means the 31 June 2020 payment of tax is suspended.
• The minimum income floor for Universal Credit is to be suspended, meaning all those who are self-employed can access Universal Credit at the rate equivalent to statutory sick pay for employees ie £94.25 a week.

Universal Credit and tax credit increase

• Standard Universal Credit allowance and Working Tax Credit basic allowance are both being increased by £1,000 a year to help families ie both will increase by £20 per week on top of planned annual uprating.
• New claimants will not need to prove 'gainful self-employment' if they are self employed and applying for Universal Credit.
• Claimants with Covid-19 or are self-isolating can receive advance payment upfront without having to go to a jobcentre.

SME Small & medium businesses - Coronavirus Business Interruption Loan Scheme

• Interest-free loan scheme announced last week has been extended from six months to 12 months. Scheme starts Monday March 23.
• The next quarter of VAT payments due from companies at the end of March has been deferred until the end of June. The VAT return still needs to be filed but it does not need to be paid if the business is struggling - allowing it to use the VAT 20% collected as cashflow for the short term.
• Additionally all businesses and self employed workers in financial distress and with outstanding tax liabilities, may be eligible for HMRC's Time To Pay service - ie HMRC allowing up to 12 months to pay off debts

For renters

• After announcing mortgage 'payment holidays' for up to three months for homeowners last week, a £1 billion package to support renters is announced by increasing the housing benefit under Universal Credit.
• Recipients would receive welfare to pay at least 30 percent of market rents for their local area.
• No rental pause from the government.

Other help

• Mortgage lenders have agreed that they will allow up to 3 months mortgage holiday for customers experiencing financila difficulty.
• Relaxation of planning permission to allow pubs and restaurants to start providing takeaway services without planning application
• Insurance claims for loss of earnings should be valid if your business is effected by a government requirement to close eg pubs, bars, cafe, nigh clubs, gyms, restaurants etc
• Business Rates discount up to 100% for 1 year for leisure and hospitality, contact your local council for more info
• Grants of up to £25,000 to retail, hospitality & leisure businesses operating from small premises with rateable value between £15k to £51k
• One off grant of £10,000 to around 700k businesses eligible for small business rate relief (SBBR) to help meet on going business costs
• Bank of England base rate dropped to 0.10% interest will help those with variable interest rate loans and mortgages by reducing their monthly payments - press your bank to adopt immediately and not delay by months as they normally do

By Anni Khan at Tax Affinity Accountants

Tax Affinity Accountants are experts in Tax and Accountancy. Based in Worcester Park and Kingston upon Thames and Epsom they are considered in the Industry to be expert business accountants and tax advisors for small and medium sized businesses (SME's). Helping and supporting limited company owners and self employed people throughout the UK, they regularly help clients grow their business providing tailored advice and support. Their support has been considered invaluable by many clients and key to their success.

For more information visit www.taxaffinity.com. To read more interesting articles like this visit www.taxaffinity.com/blog. Please feel free to comment and share this with your friends.

Making the Most of the New 7-Day-Switch Scheme for Banking

The long running perception of the UK banking sector as an oligopolistic market- one which is dominated by the four largest banks- may be challenged by the new 7-Day-Switch scheme which should substantially reduce barriers to switching your current account. According to the Office of Fair Trading, Britain’s four top banks- Lloyds banking Group, Barclays, RBS and HSBC- control around 75% of the current account market and have thus been able to offer sub standard current account deals to customers due to a lack of competition.

The Government’s new 7-Day-switch scheme, which began on 16th September, does exactly what is says on the tin. Whereas customers have previously waited up to a month to switch bank accounts, under the new shake up of the banking sector, high-street banks have promised to switch current accounts within seven days. They will transfer across all payments into and out of customers’ accounts, thus reducing the perceived hassle of switching accounts.


How the scheme may benefit you:

With reduced barriers to switching your current accounts, it may be very sensible to start looking at some of the other offers around at present. A spokesperson from the Money Advice Service suggested it was “not uncommon to save £500 or £600 by switching your bank.” Summarised below are some of the best offers out there in the market at the moment:

 
Cashback and Package Deals

·         Santander, 123 Account- One of the few accounts that offers interest on your money. It offers 1% on balances from £1000, 2% on balances from £2000, and 3% on those between £3000 and £20000. It also offers you cashback on household bills payable by direct debit (1% on water, council tax and mortgage payments; 2% on gas/electricity bills; and 3% on mobile phone and broadband). However, you will have to pay a £2 monthly fee and ensure a minimum monthly funding of £500 into the account. 

·         Nationwide, FlexAccount- A packaged deal offering you worldwide family travel insurance, mobile phone insurance, breakdown cover and warranty cover for your appliances. You also get 3% interest on balances up to £2500 and a 3 month free overdraft, although there is a monthly fee of £10.

Fee-free Deals

·         First Direct, 1st Account- Offers you £125 for switching plus a fee-free account provided you pay at least £1000 into the account each month. Further benefits include a fee-free overdraft up to £250 and excellent customer service (£100 cashback if you decide to leave within 6 months).

·         Halifax, Reward Current Account- You get £100 cashback when you switch plus £5 a month reward, provided you pay in at least £750 per month and pay out at least 2 direct debits. 

 
Business Current Accounts 

If you run your own business it will also be of benefit to compare the market for the best business account deals. Some of the key features include fee-free banking, interest on balances that remain in credit, and overdraft facilities. Some recommended business accounts are outlined below:

·         NatWest, Start-up Business account- Offers 2 years free banking with a £500 fee-free overdraft, provided your business is less than 12 months old with a turnover of less than £1 million.

·         Lloyds TSB, StartUp Account- 18 months free banking as long as your account remains in credit. You can also get consultation support from a relationship manager.

·         Santander, Business Start-Up Current Account- 12 months free banking and 0.25% interest on balances.


Summary

The key to finding the best deal for yourself is to ascertain exactly what benefits you most seek. If you often dip into your overdraft then it will be advantageous to look at accounts offering fee-free overdrafts. Alternatively, if you always remain in credit then you can start to shop around for higher interest rates and other perks from package deals. As a business owner you should also shop around to get the best deals and maximise the money you retain in your business.

Very few current account deals are offering interest at present and thus your money is losing value in this inflationary climate. Therefore, it is certainly worth assessing your options in order to maximise the benefits you can receive. Furthermore, as the new 7-Day-Switch scheme begins to take effect, banks should start to offer more attractive and innovative packages to entice customers away from competitors. It is therefore worth keeping a beady eye on new offers as they enter the market.

By Tom Hoadley at Tax Affinity Accountants. Tax Affinity based in Kingston upon Thames are expert accountants and tax advisers with client across the UK and abroad. For more information or a free initial consultation visit www.taxaffinity.com. Please feel free to comment and share this article with your friends. Follow us on twitter @Tax_Affinity for more money saving tips.