Newsletter contents with advice from The Accountancy Practice for CThA members

Newsletter from the Complementary Therapists Association May 2020.

The COVID-19 pandemic is having a profound effect on the lives of millions of people around the world and the restrictions to daily life have forced us to quickly adopt different ways of working, learning and connecting with each other. This crisis has brought unprecedented challenges both for people and society, innovation is more important now than ever before.

In response to the pandemic and its effect on the complementary health and wellness sector, CThA have been working hard behind the scenes to offer support and assistance to our members. Financial advice for small businesses and the self-employed was a primary concern amongst our membership and we hope the email we sent out last month detailing the Coronavirus Self Employed Support Package helped to alleviate some of the uncertainty in these very uncertain times. As we still do not have any indication from the government as to when therapists will be able to resume practice, we enlisted the help of Helen Froggett from The Accountancy Practice to give members further financial advice and signpost support available to complementary therapists during the COVID-19 crisis.

The government has announced a range of packages of financial support for employees and self-employed business people in an attempt to keep the country afloat in these terribly difficult times. The packages are initially in place for three months. There are different systems for self-employed and employees. You may have come across the term ‘furloughing’. It is also called the Job Retention Scheme and is being offered to people who are paid using a PAYE scheme. This essentially requires the employee to stay at home, ‘on stand by’, and be paid 80% of their usual salary. This money is not a loan, it is a grant (‘free money’) and it is reimbursed by the government, after their employer has paid the money to their furloughed employee. Staff who work for an employment agency, people on Zero hours contacts, flexible or fixed term contracts, seasonal contracts and those paid via an umbrella company all qualify if they are paid by the PAYE system.

If you want to talk to someone in confidence, for free, about your individual position regarding any of the issues outlined please email me, helen@theaccountancypractice.com and I will be happy to help.

The majority of self-employed people are also being supported. I would like to clarify who is self-employed for these purposes.

• It is NOT directors of limited companies (even sole directors) even if they feel as if they are ‘self-employed’ or have been classed in this way when applying for mortgages in the past.
• All directors who are paid on PAYE, will be awarded 80% of their usual PAYE salary, if they are ‘furloughed’. Furloughing also called the Job Retention Scheme is to be administered on a three week basis. And is to be run through the PAYE system. You will need to register for an online PAYE account if you do not have one already. The system is expected to be in place by the end of April.
• You are not allowed to work for the business which is furloughing you. However, you CAN work for a different company – let’s say you wanted to work as an essential worker or be a volunteer. If you get permission from your employer you can do this for the duration of the period in which you are furloughed.

Self-employed support from the government has these eligibility criteria:

• Your self-employed income needs to represent more than half of your annual income.
• You need to have been self-employed long enough to have submitted a tax return for year ending April 2019. As you will know, the latest date for your self-assessment tax return for trading year ending April 2019 was 31st January. However, given some people may not have submitted their return, the government are allowing those people until 23rd April to get their return in.
• If you started your business after April 2019 I am afraid that you are not eligible for this scheme.
• The amount the government are offering is 80% of the profit which you declared on your tax return for the year which ended last April – so the trading period April 2018 to April 2019. Up to a maximum of £2500 per month. For the avoidance of doubt, this is the figure you submitted which was the difference between your total income and your total costs. The figure upon which your tax was calculated. Simply put, the figure you used as your declared profit on your tax return.
• There is a cap relating to the amount of profit you declared, to qualify for help in terms of the government’s new SEISS (Self Employed income support scheme).
• If you made more than £50,000 profit last year, then I am afraid you will not be receiving any financial support from the government.
• However, the figures are being averaged over the last three years. So if you made, for example, over £50,000 taxable profit as a self-employed person last year but less the year before and the total for the two years is £100,000 or less, then you are eligible.
• If you have three years trading, the figure would need to be £150,000 or under. So it is averaged out.
• The government will send you three month’s worth of averaged profits, hopefully by the end of June.
• The amount is taxable and will need to be declared on the relevant tax return.
• It is a grant and not a loan. You will not need to pay it back.
• They will contact you to ask that you complete some details.
• Please be aware of scams with people emailing you to ask for information or offer you refunds. There’s many scams circulating and making the whole situation even more complicated.

If you cannot wait until the end of June for the support, you have three main options:

1. One is to apply for an interest free business loan (which is interest free for twelve months) which is referred to as CBILS. Coronavirus Business Interruption Loan Scheme. They have relaxed the criteria for this loan, and for businesses borrowing £250,000 or less, they are saying that there doesn’t have to be the usual security and that your homes (referred to your Principle Private Residence) do not have to be used for this purpose to secure the loan. In fact, they’ve said that they MUST not be used. So if your bank does ask for your home to be used, point them to this information here.

2. The other option is to apply for Universal Credit, if you have less than £16,000 between the adults in the household. They have removed the ‘Minimum Income Floor’ to that more people can qualify for this financial life line. If you are awarded this money and you are self-employed, it will come off your payment in June. So you could see it as an advance. If you qualify the standard weekly figure is £94 per week but there are other support measures for people who are renting, so do get in touch and see if you qualify.

3. There’s also ‘new style’ Employment and Support Allowance, (ESA) which is awarded on an individual basis. And there’s no savings limit for this one. They have relaxed the usual requirements – for example, you do not need to be ill to qualify for this support – you can be shielding or in isolation. Also it is usually for employed people but now they’ve said that if you’ve paid two years or more self-employed national insurance contributions, you will qualify for this support. Which is £74.00 a week.

Other support and suggestions

• If you had some money to pay in July ‘on account’ you have been given a ‘tax payment’ deferment option – you can pay the money with your December 2021 payment.
• If you pay VAT you do not need to pay the VAT bill for the next couple of months until the end of the tax year. You DO have to submit your VAT returns but for the one which falls before May 2020, you will automatically have your payment deferred, as long as you submit your return.
• If you pay by Direct Debit we suggest that you cancel your DD as if the money goes out, it is likely to come back! Protect yourself as much as possible.
• If you haven’t already, contact anyone you owe money to, via regular payments or loans, standing orders etc. Whether this is for rent, mortgage, leases, utility bills etc. as about their new payment terms. Mortgage companies are being asked to offer a ‘payment holiday’ for three months. Grants relating to rateable business premises for small businesses.
• If you had rateable premises, with a rateable value of between £15,000 – £51,000 & are eligible for Small Business Rate Relief or Rural Rate Relief and you had to close your shop/premises, you might be eligible for a cash grant from the government of up to £10,000. This relates to England. Please check out the scheme where you live.
• Please look at your local council website – some are asking people to apply using an online portal and some say they will contact you. Please don’t miss out on this potentially helpful sum of money. Look into whether you are eligible. If you work from home and your home is not registered for small business rates relief, then you will not be eligible for this grant.

If you have any questions regarding this information please do get in touch – you don’t need to be a client. We are happy to help anyone we can in these difficult times. Please email me… helen@theaccountancypractice.com and I will happily get back to you.

Helen has put together a video which you can access via the members area of the CThA website (for self-employed information skip forward 5mins). If you would like to read the blogs The Accountancy Practice have written on the topics covered, please visit: www.theaccountancypractice.com or use this link to go straight to their blogs…