With the coronavirus causing panic throughout the world, we thought we should look at some of the tax implications.

The coronavirus pandemic is going to cause a number of changes to finance, business and work. In today’s article, we’ll give you our analysis on how this will affect your tax status, liability and reporting.

Obviously, things are changing by the day. We’ll have many more articles in the weeks and months to come as things develop. Please feel free to check out all the other tax articles on our website too.

HMRC has launched a dedicated page to offer support for business. It has a good summary of the measures introduced so far.

Working From Home – Employees

The biggest change to the normal UK working pattern will be the rise in people working from home. If you are a normal, salaried employee, you may be able to claim some tax relief on bills. This includes:

  • Gas
  • Electricity
  • Telephone calls

There are a couple of conditions that you must fulfill:

  • Things like telephone calls must be specifically for business purposes
  • Only a reasonable portion of utilities bills will apply for tax relief
  • You must be working from home at the specific request of your employer

Working From Home – Self Employed

If you work from home as a self-employed person, you have a bit more flexibility. There are broadly two ways you can offset your running costs.

The “simplified” option works off a flat rate. You just need to keep a running total of how many days you work from home each month. It’s convenient and simple to calculate (only telephone calls need to be itemised separately). The bands are:

  • 25-50 hrs per month – £10
  • 51-100 hrs per month – £18
  • 101+ hrs per month – £26

As we say, this is the most simple way of doing things. However, you may be able to get more relief via the “fair and reasonable” method. Here you actually work out the direct costs per month and use that figure.

As you can imagine, this requires a bit of calculation. You will have to pro-rata overheads costs (like heating and lighting) by the number of rooms in your house. If you’d like some help doing this, it’s often easier to work with a personal tax specialist.

SSP, Wage Subsidies & Business Rates

The government has announced that SMEs can reclaim statutory sick pay (SSP) paid because of coronavirus. The refund covers up to two weeks of pay, and applies to companies under 250 employees.

There have also been discussions around wage subsidies. Under the proposed scheme, businesses will not make staff redundant. They will keep employees “on the books” while cutting salaries (possibly to zero). The government will then make up the difference.

Finally, the government has promised cash grants and business rate “holidays” to the following sectors:

  • Shops
  • Restaurants & cafes
  • Cinemas
  • Hotels

The tax implications of these changes are currently unclear. There will have to be further clarification from HMRC as to how these grants and rebates will be paid, recorded and filed. We will keep you up to date as soon as new developments arise.

If you’d like to discuss with us how the virus might affect your business or your personal finances, please get in touch.

Do you have any questions about personal tax?


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