UK COVID-19 support – what it means for NI farmers

Over the last few days, the British government has announced a number of schemes to help individuals and businesses through the current COVID-19 pandemic.

While some of these schemes and initiatives are not applicable to farmers, there are still various things to note.

Among one of the first announcements was that domestic rates bills in NI will be delayed for three months to June 2020.

Any farmers with facilities that pay business rates will pay zero rates for the next three months.

Income tax

On income tax, all tax payers have the option of deferring the second payment on account for 2019/20, due on 31 July 2020, until 31 January 2021.

It is an automatic offer, so there is no application required to HMRC. The downside is that if farmers defer this payment, then they potentially face having to make a large tax payment next January.

VAT

For those who might face a VAT repayment, all businesses have been given the option to defer payments that are due between 20 March 2020 and 30 June 2020.

In effect, this means deferring VAT for one quarter of the year, with taxpayers having until 31 March 2021 to pay any liabilities accumulated over this period.

As with an income tax deferral, this is an automatic offer and there is no need to contact HMRC.

However, most farmers in NI claim back VAT rather than make VAT payments, and this process continues as normal.

Self-employed

Also announced by the British Chancellor Rishi Sunak is a Self-employment Income Support Scheme, designed to support self-employed workers and those in partnerships.

It will pay a grant of 80% of an individual's average monthly trading profit over the last three tax years, up to a cap of £2,500 per month.

In theory, farmers in NI would be potentially eligible, but there are a number of conditions, and more guidance still to come.

The application process is not yet open. The HMRC will contact you if you are eligible and invite you to apply online.

To be eligible, a person must have been trading in the 2019/20 tax year, and intend continuing to trade in 2020/21.

There is also a requirement that the person must “have lost trading/partnership trading profits due to COVID-19”.

With farmers potentially facing higher costs and lower returns due to the coronavirus outbreak, there is a clear argument that farmers should be eligible, but it is not known if HMRC will see it that way.

The other issue to note is what happens if issues arise in processing, causing a significant reduction in prices. Farmers might prefer that government step in to support markets, rather than giving them a one-off payment.

Conditions

In terms of the self-employed scheme, one of the following conditions must also be met:

The maximum of £2,500 per month for three months will be paid as a lump sum directly into bank accounts from the beginning of June.

However, those who pay themselves a salary and dividends through their own company are not covered by the scheme. That potentially rules out the owners of some larger farm businesses.

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