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Covid-19 Self-assessment Self-employment

COVID-19 and How it Affects Your Businesses Tax Operations


Covid-19 Business Tax

With the outbreak of COVID-19 rapidly spreading across the UK, questions are being raised on how it is going to affect small businesses.

And as we are advised to restrict travel and all unnecessary human contact, our ability to work is brought to a sudden holt.

But for those small enterprises affected by COVID-19, measures are being put into place by the government to help support businesses and individuals concerned about paying tax due to the outbreak.

So, what steps can be taken to support you and your business in the upcoming months?

Ring the tax helpline

If you need help or concerned about paying your businesses tax due to COVID-19, HMRC has launched a tax helpline to advise individuals on ways to pay their tax through special measures.

Businesses and self-employed individuals who have seen a disruption to trade, resulting in them being unable to pay their tax, can call the advice line to get practical help and support.

Up to 2,000 experienced call handlers can advise those affected into what systems that can be put in place regarding paying tax.

Routes that can be explored include an instalment arrangement, suspending debt collection proceedings, cancelling penalties and interest where there are administrative difficulties in contacting or paying HMRC immediately.

The helpline number is 0800 0159 559 and is an addition to other HMRC phone contact numbers.

Check to see if you’re eligible for the government support package

A package set out by The Chancellor will see temporary, timely and targeted measures to support public services, people and businesses that have been disrupted by COVID-19.

Small retail, leisure and hospitality businesses with a rateable value of less than £51,000 will not be charged business rates, a property tax, by the government in 2020-21.

Instead, local authorities, which collect the rates, will be provided with £2.2 billion by the government to make up for the shortfall.

Industry body UK said that this measure allows small businesses “some breathing room” to mitigate against the impact of the decrease of consumer demand.

Experts welcomed the move to help smaller firms but advised against awarding it to the biggest high street retailers. Larger operators stated they feel have been “utterly ignored” despite industry efforts.

A legislation will also be brought forward for small and medium sized businesses to be granted access to a statutory sick pay (SSP) relief package. This refund will cover up to two weeks of SSP per eligible employee that has been off work because of exposure to coronavirus.

What could the lack of business profits mean for the government?

With all employees still being paid, whether it be from SSP or not, businesses will discover themselves with lower profits and therefore paying less corporation tax/income tax.

The impact of lower profits results in less tax being paid to the government, and this is the tax that supports the country in terms of the benefit system, public services including the police force, NHS, fire service etc.

“Enormous knock-on effects”

As VAT won’t be collected and paid to the government, the knock-on effects will be enormous.

Due to individuals and business spending less, or not spending at all, it could take years to recover with the worry of the country potentially going into recession.

And now with EU and global borders closing, imports and exports from foreign countries will see trades plummet at an alarming rate.

The most severe hit countries like China, Italy and Spain will have trade ceased from entering and exiting in a bid to restrict the deadly virus from spreading.

For any additional information or questions regarding on how your business is affected by COVID-19, check the GOV website for more guidance.


We know this is a lot to take in and it is an unprecedented time for everyone, but the more we can all work together and help each other out during this difficult time, we will get through it. If you would like to know how this may affect your personal taxes, check out our recent post. For any further information or help, you can keep up to date with our social media feeds.