COVID-19 Schemes Updates
In this blog post, we follow-up on our Part 1 Covid-19 Updates – as posted last month- to conclude with the recent updates to Government help to UK businesses affected by Covid-19.
NHS Test and Trace
If you are self-employed, a partner or employed claiming work-related benefits, such as Universal Credit or Working Tax Credit, and you have been asked to isolate as a result of the NHS’ Test and Trace app – you are entitled to a lump-sum payment of £500, provided you are unable to work from home and have lost income.
The £500 is taxable income and should be reported to HMRC after the end of the tax year, but is exempt from NIC. The local authorities are administrating the payment of this £500 lump sum and so you should contact your local authority for details.
There has been some confusion as to whether a COVID-19 test paid for by a UK employer is a taxable benefit on the tested employee. Tests can cost around £120 per employee.
In July 2020, HMRC announced that the cost of a COVID-19 test for an employee, where the test is paid for by the employer, would be a taxable benefit on the employee. Following pressure in December, the Government announced one of its famous ‘U-Turns’ and stated the cost of testing employees will now not be a taxable benefit on tested employees.
However – the devil is in the detail. The above exemption from a taxable benefit only applies to the antigen test, the test used to identify if you have ‘had’ COVID-19 in the past.
We are not sure how frequently the antigen test is needed, but employers should note that the exemption from a taxable benefit on your tested employees only applies if you have paid for this test only.
The good news is that employees ‘antigen tests’ carried out from 6 April 2020 to 8 December 2020 and paid for by their employers are included within the exemption from employee taxable benefit rules.
COVID-19 Working from Home
This subject has been covered in a previous blog post, but it has been recently announced that there will be a slight relaxation in the rules for claiming the HMRC agreed £6 per week being the tax-free allowance to go towards covering the extra home running costs of working from home.
The slight relaxation is that the £6 per week can be claimed even if you the employee (includes directors) works just one day a week at their home. Previously employees had to be required by their employment contract to work ‘full time’ at home.
So for each week that you work from home – due to the COVID-19 restrictions – either for the full week or any part thereof you can claim a tax-free allowance from HMRC of £6 for that home working week. As has been said before ‘every little helps’!
Business Interruption Insurance Policies
Last January the Supreme Court cited that insurance companies should pay out on business interruption insurance policies which included provisions for income lost due to notifiable diseases including the COVID-19 pandemic. As the payment under the Business Interruption policy is for the loss of trading income the money received is treated in the same way as trading income i.e. liable to Income Tax or if the beneficiary is a company liable to Corporation Tax.
The insurance compensation proceeds are normally included in the business accounts for the period for which the trading income was lost. However, this is only if the insurance compensation was virtually certain at that time otherwise it should be reported in the business accounts for the period when the insurance compensation became certain.
Given that the insurance companies took their argument that COVID-19 was not covered by their Business Interruption Insurance policies to the Supreme Court then it seems reasonable for the businesses benefiting from the insurance compensation to include the amount received in their accounts for the period covering the Supreme Court’s decision as announced on 15 January 2021.
As you will appreciate in the ‘World of insurance claims’ each case is decided on its own facts and circumstances relevant to the specific terms of the insurance policy held e.g. some insurers have announced that they will not be deducting the Governments COVID-19 support grants received by the policyholder from the insurance compensation but this is not all insurers!
HaesCooper can help you with your UK fiscal requirements whether you are a small, medium or large business. To discuss your needs or to learn more – contact us.
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