COVID-19: Tax reliefs


03 April 2020

As the COVID-19 situation develops, the UK Government has announced various financial support packages to try and help businesses cope with the huge impact of the policies designed to tackle the outbreak. Some of these measures relate to tax, and the Birketts Corporate Tax Team set these out below.

Tax deferral

VAT

  • VAT return liabilities falling due in the three month period between 20 March and 30 June 2020 can be deferred.
  • If a business chooses to defer such VAT it must pay the deferred amount on or before 31 March 2021.
  • All UK businesses are eligible and the scheme is automatic. Therefore, no applications are required to be made.
  • Please note that the VAT refund and reclaims will be paid by HMRC as normal.
  • VAT payments falling due outside of the deferral window referred to above must, subject to further announcements, be paid as normal. 

Income Tax: self-assessment

  • Income tax self-assessment payments due on 31 July 2020 will be deferred until 31 January 2021.
  • Self-employed workers, as well as other tax payers due to make a payment on account, are eligible for this deferral, which is automatic and no applications are required.
  • No penalties or interest will be charged in the deferral period.
  • We note that the Government’s guidance states that the deferment is optional and anyone who is able to pay their second self-assessment payment on account on 31 July 2020 should still do so.

Time to Pay Scheme

  • Any business or self-employed person suffering from financial distress, who has outstanding tax liabilities, may be eligible to receive support with their tax affairs.
  • Arrangements are agreed on a case by case basis.
  • If you need assistance you can call a dedicated HMRC helpline on 0800 0159 559 to discuss your situation.

Business rates support

  • Retail, hospitality and leisure businesses.
    • All businesses in the retail, hospitality or leisure sectors in England are eligible for a business rates holiday.
    • Full relief from business rates is to be given in the 2020/21 tax year.
    • Properties are only eligible for the scheme if primarily used:
      • as a shop, restaurant, cafe, drinking establishment, cinema and/or live music venue; or
      • for assembly and leisure; or
      • as a hotel, guest/boarding premises or self-catering accommodation.
    • The scheme is automatic and should be applied to the next invoice in 2020. The Government's advice notes that local authorities may need to reissue invoices to reflect these changes.
  • Nursery businesses
    • All nursery businesses in England are eligible for a business rates holiday.
    • Properties that can benefit from the relief must be:
      • occupied by providers on Ofsted’s Early Years Register,
      • wholly or mainly used for the provision of the Early Years Foundation Stage.
    • Properties that can benefit from the scheme will receive the benefit automatically; it should be applied to the next invoice in April 2020. The Government's advice notes that local authorities may need to reissue invoices to reflect these changes.

Although not strictly 'tax' we should also mention that various other financial packages have been announced, including cash grants of up to £25,000 for retail, hospitality and leisure businesses, and a one off grant of £10,000 for businesses that pay little or no business rates. There are also other financial support packages available and please see the Government website to find out further details.

The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at April 2020.

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