Small employers can now reclaim statutory sick pay (SSP) paid to employees who were absent from work due to the Coronavirus. The online claim service went live on 26 May 2020.
Employers can use the scheme to claim back SSP paid to an employee who is eligible for SSP due to Coronavirus if:
- they have a PAYE payroll scheme that was in operation on 28 February 2020; and
- they had fewer than 250 employees at that date.
SSP can only be reclaimed where the employee’s absence relates to Covid-19; where the absence is for another reason, the employer must meet the cost of any SSP paid. An absence counts as a Covid-19 absence if the employee is unable to work because:
- they have Coronavirus;
- they are unable to work because they are self-isolating because they live with someone who has Coronavirus symptoms; or
- they are shielding and have a letter from the NHS or GP telling them to stay at home for at least 12 weeks.
Claims can be made for periods of sickness on or after 13 March 2020 where the employee has Coronavirus symptoms or is self-isolating because a member of their household has symptoms and for absences on or after 16 April 2020 where the employee was shielding.
The employer can claim back the SSP paid in respect of qualifying Covid-19 absences up to a maximum of two weeks’ SSP per employee. Where the employer pays more than the weekly rate of SSP, rebates must be claimed at the SSP rate — £95.85 per week from 6 April 2020 and £94.25 per week previously.
Evidence and records
Employers do not need to get a Fit note where an employee is off work due to Coronavirus. However, you can ask for an isolation note from NHS111 where the employee is self-isolating or a letter from the NHS or the employee’s GP where the employee is shielding.
Records should be kept of the dates of absence, the SSP paid to each employee, their National Insurance number, the reason for their absence and, where provided, evidence in support of their absence. Records should be kept for three years from the date that the rebate is received.
Making the claim
Claims can be made online on the Gov.uk website. To make a claim, the employer will need:
- their employer PAYE scheme reference;
- contact name and phone number;
- bank details (where a BACS payment can be accepted);
- total amount of SSP paid to employees in the claim period in respect of Covid-19 absences;
- number of employees in respect of whom the claim relates; and
- the start and end date of the claim period.
Claims can be made for multiple periods and multiple employees at the same time. The end date of the claim is the end of the most recent pay period for which a claim is being made.
During the COVID-19 pandemic, landlords may find that tenants are unable to pay their rent, and, when a let comes to an end, that they are unable to re-let the property, or have to accept lower rent. As a result, they may make a loss on their property rental business.
Calculating the loss
Any loss arising from the property rental business is calculated in the same way as profits. Where the cash basis is used, as will generally be the case being the default basis of preparation for most smaller landlords, the loss for the period will be the cash received by the property rental business less the cash paid out.
Automatic set off against properties in the same property rental business
As profits and losses are calculated for the property rental business as a whole, if there is more than one property in the rental business, a loss on one property is automatically set against any profit from other rental properties in the same business.
A landlord has three properties that he lets out. In 2019/20 he makes a loss of £3,000 on property A, a profit of £2,000 on property B and profits of £1,500 on property C.
The loss on property A is set against the profits on property B and C when calculating the overall result for the property business as a whole. Overall, the property business has a profits of £500 (-£3,000 + £2,000 + £1,500).
Utilising a loss
The general rule is that a loss on a property rental business can be carried forward and set against profits from the property rental business in the following year. If there is a loss in the next year or profits are not sufficient to fully utilise the loss, any unused part of the loss can be carried forward to the next year and so on until it can be used. There is no limit on the number of years for which the loss can be carried forward.
The same property business
Losses can only be set against the future profits of the same property business. If the landlord has more than one property business, for example a UK property business and an overseas property business, the losses from one cannot be set against the profits of another. Losses from a furnished holiday letting business can only be carried forward and set against profits of that business.
A landlord has a property rental business. In 2017/18 he makes a loss of £5,000, in 2018/19 he makes a profit of £4,000 and in 2019/20 he makes a profit of £3,000.
The loss of £5,000 is carried forward and £4,000 of it is set against the profits of 2018/19, reducing the profits for that year to nil. The balance of the loss of £1,000 which cannot be used is carried forward and set against of 2019/20, reducing the taxable profit for that year to £2,000.
Losses lost if property rental business ceases
If the property rental business ceases before the losses have been used up, the losses are lost. This remains the case if the landlord starts a new property business after a gap as the new business will be a different property rental business.
As a result of the Coronavirus (COVID-19) pandemic, many workers have been forced to work from home. While working from home saves the costs of commuting to the workplace and perhaps allows workers to adopt a more relaxed dress code, there are also costs associated with working at home. Workers may need to equip themselves with somewhere to work, and perhaps invest in furniture, equipment and stationery where this is not provided by the employer. Household bills are also likely to increase as a result of homeworking arrangements.
There are also tax implications to consider, both where the employer meets the additional costs and provides equipment etc., and also where the employee picks up the tab.
Additional household expenses
Household expenses may increase where an employee works from home – the costs of heating and lighting may rise, as may telephone, broadband and cleaning costs. The tax system recognises this and include an exemption that allows employers to reimburse tax-free reasonable additional household expenses incurred as a result of working from home. Household expenses are defined as ‘expenses connected with the day-to-day running of the employee’s home’. For the exemption to apply, the employee must be working at home under ‘homeworking arrangements’. These are arrangements between the employee and the employer under which the employee regularly performs some or all of the duties of employment at home.
The costs that can be reimbursed within the scope of the exemption include the additional costs of heating and lighting the work area and increased charges for internet use, home insurance or business telephone calls. Where working at home triggers a liability for business rates, the extra cost that this entails can be met within the terms of the exemption.
The exemption does not apply to fixed costs which are the same regardless of whether the employee works at home or not, such as rent or mortgage interest. Likewise, expenses that put the employee in a position to work at home, such as the costs of setting up a home office, are not covered
As regards the amount that can be reimbursed tax-free, the employer can meet the actual additional costs of working at home. However, these are likely to be difficult and time consuming to identify, and the effort is likely to be disproportionate to the amounts involved. Far simpler is to take advantage of the flat rate allowance which enables employers to pay homeworking employees £6 per week tax free to cover additional household expenses. Prior to 6 April 2020, the tax-free amount was £4 per week. On the downside, the amounts are not exactly generous and may not cover the additional costs in full.
However, where an employer does not meet the cost of additional household expenses, the employee can only deduct expenses to the extent that they are wholly necessarily and exclusively incurred in performing the duties of the employment. There is no corresponding flat rate deduction for employees.
Equipment and supplies
A separate exemption removes any charge to tax where the employer provides the employee with ‘accommodation, supplies or services’ used by the employee in performing the duties of the employment. In a homeworking context, this may cover the cost of providing a computer and a printer, stationery and maybe a desk and chair. Private use does not jeopardise the availability of the exemption as long as it is not significant.
Again, relief is only available to the employee for revenue costs that are wholly, exclusively and necessarily incurred – stationery costs may come into the category. There is no relief for capital expenditure met by the employee in order to facilitate working from home.
The National Insurance employment allowance is available to eligible employers and can be set against the employer’s secondary Class 1 National Insurance liability. In the 2020 Budget, the Chancellor announced that the allowance would be increased to £4,000 for 2020/21. However, from 6 April 2020, it is only available to employers whose Class 1 National Insurance liability in the previous tax year was less than £100,000. Existing exclusions continue to apply, including that for companies where the sole employee is also a director — meaning that personal companies rarely qualify.
If an employer has more than one PAYE scheme, the employment allowance can only be claimed in respect of one of the PAYE schemes.
Maximum amount of the allowance
For 2020/21, the National Insurance employment allowance is the lower of:
- the employer’s secondary Class 1 National Insurance liability for the year; and
Thus, where the secondary Class 1 National Insurance liability for the year is more than £4,000, the employment allowance is £4,000. It is set against the employer’s Class 1 National Insurance liability until it is used up. It cannot be set against Class 1A (payable on benefits in kind) or Class 1B (payable on items within a PAYE settlement agreement) liabilities – only secondary Class 1.
Remember to claim
The National Insurance employment allowance is not given automatically and must be claimed. A claim can be made through the employer’s payroll software; the claim is made in the Employment Payment summary by putting a ‘Yes’ in the Employment Allowance indicator field. It only needs to be claimed once for the tax year – once claimed it is available until the allowance has been used up. Any unused balance is carried forward to the next tax month.
The claim can be made at any time in the tax year, but it is advantageous to make the claim as soon as possible. If a claim is made too late to enable it to be fully offset against the employer’s secondary Class 1 National Insurance liability, the employer can either ask HMRC for a refund, providing that they do not owe anything to HMRC. Alternatively, the unused amount can be set against other tax bills which the employer has to pay – including VAT and corporation tax.
Employers eligible for the employment allowance should not only remember to claim it for 2020/21 – they should also check that they utilised the allowance in full in 2019/20.
As the Government’s response to the Covid-19 pandemic evolves, various measures have been announced to help business struggling to cope with the impact of the virus. The measures include help through the business rate system for smaller businesses and those in certain sectors.
Grants for businesses eligible for small business rate relief
Full (100%) small business rate relief (SBBR) is available for businesses where the rateable value of their business premises is £12,000 or less. Where the rateable value is between £12,001 and £15,000, reduced SBRR is available, tapering from 100% where the rateable value is £12,000 to nil where the rateable value is £15,000 or above.
To help businesses that pay little or no business rates, it was announced at the time of the Budget that funding would be provided to local authorities to provide businesses eligible for SBBR with grants of £3,000. However, following the Budget, the Chancellor announced an increase in the amount of the grant, to £10,000. The grant is a one-off grant designed to help eligible businesses to meet their on-going business costs. The grants will be available to businesses that receive full or tapered SBRR or rural relief.
Businesses do not need to claim the grants – local authorities will write to businesses that are eligible.
Retail, leisure and hospitality sectors
To help sectors that are being hit particularly hard during the Covid-19 pandemic, retail business rate relief is to be doubled from 50% to 100% for 2020/21 and extended to businesses in the leisure and hospitality sectors, providing them with a business rate holiday for 2020/21. The holiday will apply to eligible businesses in England where the rateable value of their business premises is less than £51,000. It will apply where the premises are used wholly or mainly as:
- shops, restaurants, cafes, drinking establishments, cinemas and live music venues;
- for assembly or leisure;
- as hotels, guest and boarding premises and to provide self-catering accommodation.
Businesses eligible for the holiday do not need to take any action – it will apply to the council tax bill in April 2020. However, where a bill has already been issued, councils may need to reissue a bill to exclude the business rate charge.
Businesses in the retail, leisure and hospitality sectors will also be able to benefit from a cash grant of up to £25,000 where the rateable value of their business premises is £51,000 or less. The grant is set at £10,000 where the rateable value is £15,000 or less, and at £25,000 where the rateable value is between £15,001 and £51,000. Business do not need to claim the grants – local authorities will write to businesses that are eligible.
A business rates holiday for nursery businesses is being introduced for 2020/21. It will apply to nursery businesses based in England in premises occupied by providers on Ofsted’s Early Years Register and used wholly or mainly for the provisions of the Early Years Foundation Stage. Local authorities will apply the holiday automatically, although this may involve re-issuing bills that have already been issued.