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April 15th 2020, by Calvin Cooper

15 April 2020

The Scottish Government have announced a further pot of £220m aimed at plugging some of the gaps the other previously-announced grants failed to cover.

This includes:

  • Extensions to the Small Business Grant scheme, allowing businesses with more than one qualifying property to claim an additional 75% grant on the second property (and any subsequent properties).
    • They haven't explicitly said if additional self catering properties still qualify for this, but we would expect that they do, so long as the subsequent properties also meet the qualifying criteria.
    • This fund will be open for further applications from 5 May 2020.
  • Further assistance to self-employed people and 'viable micro and SME businesses' in distress due to COVID-19.

The full details of the new self-employed grant are yet to be announced, but the Scottish Government have confirmed that this will be administered through your local authority (rather than dealt with centrally), and the application window will open at the end of this month.

Job Retention Scheme (JRS)

The JRS - or the grant payments for 'furloughed' workers - has been extended to include employees who were on the payroll by 19 March 2020.

This is very welcome news, and helps cover folk who genuinely changed jobs between the end of Feb (which was the original JRS cut-off date) and this new date.

There is one key point though: the employee must have been included on an RTI declaration to HMRC on or before 19 March 2020.

This condition is very understandable, as it helps prevent back-dating of employees, which would expose the government to fraudulent claims.

Practically speaking, this will now catch new employees who are paid weekly, fortnightly, or monthly around the middle of each month.

Unfortunately, those who only get paid at the end of each month will probably still fail to be caught by these newly extended dates.

Welcome news though, all the same!

14 April 2020

HMRC have confirmed how they will work out 'trading profits' for the purposes of calculating the grant self-employed individuals will receive through the SEISS.

In summary, it will basically be the taxable profits shown on the face of your tax return/your SA302 tax calculation (per your accountant and/or HMRC), with only a couple of exceptions.

Notably, this means that if you've claimed capital allowances in a previous tax year, your trading profits will be deemed to be lower for that year, and the grant you receive will be reduced.

This is a bit of a bummer, as it means that businesses who had invested in equipment previously, knowing that they would only see the financial benefit of that investment in the current (and future) tax years, now appear to be punished by getting a comparatively lower grant than if they had not made that investment in their business.

Hey, at the end of the day there's always going to be winners and losers, but this seems like one area which is a tad unfair.

We'll await confirmation if the Scottish Government's new self-employed fund will cover some of this gap for Scottish businesses.

Exclusions from the SEISS calculation

The Government have confirmed that the grant calculation will not include a deduction for any carried forward losses which are being offset against profits in the year of the calculation.

For example, if you have self employed profits of £30k, but you have losses brought forward from a previous year of £5k, which had the effect of reducing your taxable profits to £25k in that year; the grant will be calculated on the full £30k.

Similarly, your personal allowance does not reduce the trading profits used in their calculation, as we had expected.

As touched on before, this grant is for 80% of your average monthly self-employed profits for up to three months. Therefore, as an example, if you have average profits of £30k per annum (between 2016/17 and 2018/19), you will be entitled to a grant payment of £6,000 (£30k x 80% x 3/12ths).

Full details of their recent announcement are here.

What's next?

HMRC are aiming to contact all qualifying taxpayers by mid-May 2020, with a view to paying out the grants in early June 2020.

Taxpayers are reminded to not contact HMRC regarding these schemes; they will get in touch with you.

If you haven't submitted your 2018/19 tax return already, you must do so by 23 April 2020 or else you will not qualify for the SEISS.

Furthermore, you're incurring penalties by now, so it just makes sense to get it submitted!

If you're unsure where you stand, or need a bit of clarification with anything, just shout and we'll be more than happy to help!

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