Essential Coronavirus financial update for doctors – including furlough, self employed support, deferment of tax payments and VAT.
Although myself and Ed are back working full time in the NHS during the Covid-19 pandemic, the rest of the Medics’ Money team continue to support doctors with their financial health. Daily lives have changed for almost everyone in the UK and during these uncertain times it can be helpful to know what support is available for you during a financial downturn. So we asked leading specialist medical accountants Sandison Easson & Co update us on what financial support is now available for doctors including furlough, self employed support, deferment of tax payments and vat.
The partners and team at Sandison Easson & Co would like to extend our thanks to all of you working in the NHS. All of us have family and friends that work in various sectors of the NHS and appreciate the task that lies ahead.
A number of financial support schemes have been announced and HMRC will have some flexibility with regards to tax payments. These are explained below.
Job Retention Scheme
Following on from the Government public announcement of the grant available for staff that are furloughed more details were published recently.
This scheme is designed to support employers whose operations have been severely affected by coronavirus and to avoid mass redundancies.
Under this scheme employers are able to claim the lower of 80% of an employee’s salary or £2,500 plus the associated Employers National Insurance and minimum auto-enrolment employer pension contributions.
To be eligible for the grant, the employee must be furloughed. This basically means laying off the employee but they remain employed on your PAYE scheme.
The main point is that furloughed employees cannot undertake any work for you if you are claiming the grant. This includes provision of services or generation of income. An employee must be furloughed for at least 3 weeks for you to be eligible to claim the grant.
If an employee is still working but on reduced hours or reduced pay they will not be eligible for the 80% grant.
It is expected that public funded organisations such as GP Practices would not be eligible for the grant in return for their funding to continue.
The scheme applies to any type of contract including:
- Full time
- Part-time
- Employees on agency contracts
- Employees of flexible or zero-hour contracts
You must write to your employee to explain that they have been furloughed and keep a record of the communication in case of audit by HMRC at a later date. Before taking any action, always seek advice from your employment lawyers in relation to any employment matters.
Any employee hired after 28 February is not eligible.
The grant will be based on actual salary before tax as of 28 February 2020. Fees, commissions and bonuses are not included.
If you cannot afford to pay 100% of an employee’s salary then we understand you can ask the employee for their consent to change their employment contract and pay them 80%. Most employees are likely to give their consent as we guess the alternative would be redundancy.
If you are a director of a limited company, it is our understanding that you can furlough yourself but must not undertake any work for the company during your furlough period. This means you can claim back up to 80% of your salary (or £2,500 if lower) but unfortunately this does not extend to any dividends you take from the company.
The portal to submit you claim is not yet live but we expect this to be in place by the end of April. Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACs payment to a UK bank account.
Self-employment Income Support Scheme
You may use services of self-employed individuals, for example self-employed secretaries. They are not eligible for the Job Retention Scheme as they are not employees however HMRC have announced a similar scheme for the self-employed that they may be eligible for. Full details can be found here:
Read about the Self-employment income support-scheme here
If self-employed individuals ask you for support, you should consider suggesting they seek advice from their own accountant as they may be eligible for support under the self-employment income support scheme.
Under this scheme HMRC will pay a grant to the self-employed worth up to 80% of their trading profits up to a maximum of £2,500 per month for the months of April to June.
To be eligible for this grant the main points are,
- You must have submitted your 2018-19 tax return and are still trading
- Have lost profits due to COVID-19
- Your self-employment profit is less than £50k and more than 50% of your total income
It is the last point which will mean most doctors will not be eligible for this grant but it may be useful to help any self-employed individuals you currently use for your business so that they remain in business and available for you once life returns back to normal. Remember this is temporary but will feel like a long time at the moment.
Income tax
Payments due by 31 July 2020 under self-assessment are now deferred until 31 January 2021. This is automatic and HMRC will not charge interest or penalties on the 31 July 2020 tax payment if made by 31 January 2021.
It is not clear at this stage whether the usual payments due in January 2021 will be due at the same time so for now assume that this is the case.
On the basis that most non-public funded businesses will see a reduction in their profits this year we expect to be able to reduce the tax payments on account for the tax year 2020/21 which are due 31 January and 31 July 2021.
VAT
For VAT registered businesses, any payments due between 20 March 2020 and 30 June 2020 are deferred until 31 March 2021.
CORONAVIRUS BUSINESS INTERRUPTION LOAN SCHEME
This is a scheme in conjunction with 40 accredited lenders able to offer the scheme and provides access to loans, overdrafts and other financial assistance up to £5m and for up to 6 years.
The scheme guarantees 80% of the loan which effectively means that the government is providing 80% security.
The government will make a business interruption payment to cover the first 12 months of interest payments and any lender-levied charges.
Further details can be found here
Finally from all of the team at Sandison Easson & Co we would like to thank all in the NHS once again and if you live nearby you will hear the sound of our appreciation as we join together with the rest of the country on a Thursday evening, 8pm on our doorsteps applauding you for all you do for us.
If you have any questions regarding the above then please do not hesitate to contact us via Medics’ Money here
You can contact Sandison Easson here Sandison Easson & Co
Please note article correct as of 2/4/20 but information changing regularly.
