COVID-19 Government Rescue – Update 20 May 2020

Coronavirus Job Retention Scheme (CJRS)


Following the extension of the CJRS until the end of October 2020, HMRC have now issued further guidance to help employers calculate their claims correctly:

  • When calculating 80% of employees’ wages, employers can only include regular payments which are non-discretionary. Therefore, payments such as those listed below cannot be included in the calculation:
    • Payments made at the discretion on the employer e.g. tips and tronc payments, discretionary bonuses, discretionary commission etc.
    • Non-cash payments
    • Non-monetary benefits in kind e.g. company cars
    • Salary sacrifice schemes

When working out whether a payment is non-discretionary, employers are advised to only include payments which they have a contractual obligation to pay and to which the employee has an enforceable right.

If variable payments specified in a contract are always made, then those payments may become non-discretionary. If that is the case, they should be included when calculating 80% of the relevant employees’ wages.

Payments for overtime worked are non-discretionary when the employer is contractually obliged to pay the employee at a set and defined rate for the overtime that they have worked.

  • For any CJRS claim made, the claim end date must be no more than 14 days in the future from the date the claim is submitted.

Self-Employment Income Support Scheme (SEISS)


The SEISS enables eligible self-employed individuals or partners in a partnership to claim a taxable grant worth 80% of their average trading profits up to a maximum of £7,500 (equivalent to three months’ profits). This grant is payable in a single instalment. The claims portal opened on 13 May 2020 and is now available for eligible individuals to make their claim. Accountants or tax agents cannot claim on behalf of their client.

HMRC have created a short film which shows the claims process. We advise clients who intend to make a claim under the SEISS to view this video prior to submitting their claim.

Self-employed persons who have incorporated at any time after 5 April 2019 and are now operating through a Limited company should be careful in claiming the SEISS grant. It is unlikely that individuals in such a position are eligible for the grant, despite HMRC’s contact or HMRC’s eligibility checker showing that the individual is eligible.

When applying, claimants are required to declare that they:

  • Traded in the tax year 2019 to 2020
  • Intend to continue to trade in the tax year 2020 to 2021; and
  • Carry on a trade which has been affected adversely by COVID-19.

When a self-employed individual incorporates, they are deemed by HMRC to cease trading in a self-employed capacity, and become employed by their limited company. The SEISS grant may therefore not be available to them, and such traders should instead check whether they are eligible for the Coronavirus Job Retention Scheme for employees.

Exemption for coronavirus related reimbursed home office expenses


On 13 May 2020, the Treasury announced a new measure which will help those employees who have received a reimbursement of expenses for office equipment acquired to enable them to work from home during coronavirus.

A temporary tax exemption and National Insurance disregard will come into effect to ensure that the reimbursed expense will not attract tax and NIC liabilities. In order to qualify for relief, the expenditure must meet the following two conditions:

  1. That equipment is obtained for the sole purpose of enabling the employee to work from home as a result of the coronavirus outbreak, and
  2. The provision of the equipment would have been exempt from income tax if it had been provided directly to the employee by the employer under existing tax legislation.

This would therefore cover reimbursed expenses like the purchase of office desks, chairs, computer equipment, reference journals etc. It will specifically exclude reimbursed expenditure on extension/conversion/alteration of living accommodation, construction expenses, motor vehicles, boats and aircraft.

The exemption is a temporary measure and will have effect from 16 March 2020 until the end of the tax year 2020/21.

Prior to this announcement, the rule was that home working equipment purchased directly by the employer and provided to the employee would usually not be taxable on the employee, whereas reimbursed expenditure would be subject to the taxable benefits rules. With the rapid change in working practices due to COVID-19, many employees will have purchased their own office equipment with the employer subsequently reimbursing them which, but for the coronavirus exemption, would have been taxable on the employee.

Local Authority Discretionary Grants Fund

Small and micro businesses

Our update of 5 May covered the introduction of the additional “top-up to local business” grants fund scheme. This scheme is now officially referred to as the Local Authority Discretionary Grants Fund (“LADGF”). The government has provided detailed guidance to support English local authorities in administering the LADGF.

The LADGF is aimed at small businesses which are not eligible for the Small Business Grant Fund or the Retail, Leisure and Hospitality Fund.

Local authorities may disburse grants to the value of £25,000, £10,000 or any amount under £10,000. The value of the payment to be made to a business is at the discretion of the local authority.


These grants are aimed at small and micro businesses.

  • To be a small business, it must satisfy two or more of the following requirements in a year:
    • Turnover must not be more than £10.2 million
    • The Balance sheet total must not be more than 5.1 million
    • The business must have less than 50 employees
  • To be a micro business, it must satisfy two or more of the following requirements in a year:
    • Turnover must not be more than £632,000
    • The Balance sheet total must not be more than £316,000
    • The business must have less than 10 employees

As a guide, local authorities have been asked to prioritise the following types of businesses for the LADGF grants:

  • Small businesses in shared offices or other flexible workspaces. Examples could include units in industrial parks, science parks and incubators which do not have their own business rates assessment;
  • Regular market traders with fixed building costs, such as rent, who do not have their own business rates assessment;
  • Bed & Breakfasts which pay Council Tax instead of business rates; and
  • Charity properties in receipt of charitable business rates relief which would otherwise have been eligible for Small Business Rates Relief or Rural Rate Relief.


A business would only be eligible for a grant under the LADGF if it is not eligible for any other support schemes. Businesses which have received cash grants from any central government COVID-19 related scheme are ineligible for funding from the LADGF. Such grant schemes include but are not limited to:

  • Self Employment Income Support Scheme
  • Small Business Grant Fund
  • Retail, Hospitality and Leisure Grant
  • The Fisheries Response Fund
  • Domestic Seafood Supply Scheme (DSSS).
  • The Zoos Support Fund
  • The Dairy Hardship Fund

Businesses which have applied for the Coronavirus Job Retention Scheme (CJRS) will be eligible for this scheme.

The business needs to have been trading on 11 March 2020 to be eligible for the scheme. Companies that are insolvent, in administration, or against which a striking-off notice has been made will not be eligible for funding under this scheme.

Application process

As local authorities will not be able to readily identify businesses that should benefit from this scheme, it is expected that they will develop some form of application process. Businesses should look out for the application process published in their local authority’s website.

Application processes and timings are likely to vary between local authorities.


Grant income received by a business is taxable therefore funding paid under the LADGF will also be subject to tax.

State Aid

Grants of £10,000 and under will be primarily managed under existing State Aid rules permitting De Minimis aid, meaning applicants can receive up to €200,000 of aid within a three-year period. Where this threshold has or would be reached by accepting the LADGF, a business can receive the grant under the new COVID-19 Temporary Framework State Aid allowance of €800,000.

Grant payments of up to and including £25,000 will be paid under the new COVID-19 Temporary Framework State Aid allowance of €800,000.

You can read more about State Aid and how it interacts with the various COVID-19 rescue schemes in our 5 May summary.

Inheritance Tax compliance changes

Individuals and Trusts

In response to the crisis, HMRC have changed the way they deal with Inheritance Tax.

HMRC will now accept forms IHT100 that are not physically signed. The form IHT100 is used to inform HMRC about a number of occasions on which inheritance tax may arise. For example, gifts, the ten-year anniversary of a discretionary trust or the ending of an interest in possession in settled property. These are referred to as “chargeable events”.

Trustees, or their professional advisers will need to ensure that:

  • the names and personal details of the trustees are shown on the declaration page of the form; and
  • the account has been seen by all the trustees and they all agree to be bound by the declaration.

The professional adviser or Trustees will need to include one of the following statements when submitting the form to HMRC:

TRUSTEE: “As trustee acting in this matter, I confirm that all the people whose names appear on the declaration page of this Inheritance Tax Account are the trustees and have both seen the Inheritance Tax Account and agreed to be bound by the declaration on page 8 of the IHT100.”

PROFESSIONAL ADVISER: “As the agent acting on their behalf, I confirm that all the people whose names appear on the declaration page of this Inheritance Tax Account have seen the Inheritance Tax Account and agreed to be bound by the declaration on page 8 of the IHT100.”


Commercial property owners

Commercial property which is older than 3 years since it was first developed is normally an exempt supply for VAT purposes. An owner of such a property may choose to tax the property, i.e. make an “Option to Tax” (“OTT”) the property so that it is treated as a taxable supply subject to the standard rate of VAT (20%).

When an OTT is made on a property, the decision needs to be notified by an authorised person in writing, by post or email, to HMRC within 30 days of making it.

Due to COVID-19, HMRC has temporarily extended the notification time limit to 90 days from the date the OTT decision was made.

The notification can now also be signed electronically and submitted to HMRC via email. However, HMRC has specified that they will need evidence that the signature is from a person authorised to make the option on behalf of the business. Examples of supplementary evidence include emailing the form:

  • with an email from the authorised signatory to the sender within the business, giving authority to use the electronic signature;
  • from the authorised signatory with their sign off in the email and the form; or
  • with an email chain or a scan of correspondence showing the authority given by an authorised signatory.

If an accountant submits the notification on behalf of their client, they will also need to provide the above supplementary evidence.

Barristers and Advocates

In order to reduce the spread of COVID-19, HMRC now requires Barristers and Advocates to pay the VAT collected on their professional fees electronically to HMRC. Payment of VAT by cheque is still common amongst barristers and advocates and HMRC have therefore introduced the change to reduce paper contact. This change will be in effect until further notice by HMRC. 


If you wish to discuss any of the key points and receive advice on how best to manage the next steps, then please contact us. We understand the difficulties that businesses face during this challenging time, and we can offer guidance to you, your business and your employees. 

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