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Covid-19 Guidance for Landlords and Tenants

Measures to Support Landlords and Tenants Through these Worrying Times

Statutory self-employment pay scheme

General property landlords are unable to claim under the COVID-19 Statutory self-employment pay scheme in respect of lost rental income: rental income is investment income and not a self-employment trade.

Conversely, Furnished Holiday Letting (FHL) is treated as a trading activity for Income Tax, Corporation Tax and Capital Gains Tax (CGT) purposes.

  • Where an FHL business involves the provision of extra services, it may be reporting its profits as a trade and have used the self-employed pages of the Self Assessment return or partnership return. In the case where a holiday trade exists, it will be possible to claim relief under the Self-Employed Income Support Scheme (SEISS).
  • Smaller FHLs who report their profits in the Land and Property section of the return are unable to make a claim under the SEISS.

FHLs may well not meet the required occupancy conditions for the 2020/21 tax year, in which case the period of grace rules will provide relief.

Deferral of Income Tax payments

Landlords who pay Income Tax under Self Assessment can delay making their second payment on account for 2019-20, which is usually due by 31 July 2020.

Landlords choosing to delay payment will have up to 31 January 2021 to pay.

CGT: Soft landing on penalties under a new 30-day reporting regime

HMRC have announced that they will not charge any penalties for failure to report Capital Gains on UK residential property within the new 30-day deadline until after July 2020.

Coronavirus Job Retention Scheme

Large landlords may need to lay off some of their maintenance staff or directors during the crisis if social distancing is too difficult to achieve.

For the claim period 1 November 2020 to 30 April 2021, employers can claim a grant of up to 80% of an employees usual salary for hours not worked, subject to a cap of £2,500 per month, instead of making them redundant due to the adverse effects of the coronavirus.

A sole director company landlord may furlough the director in respect of their employment duties.

Ban on evictions

*UPDATE 08/01/2021 – Eviction ban in England extended for six weeks to 21 February 2021.*

Private or social accommodationLandlords will not be able to start proceedings to evict tenants for at least a five-month period during the current emergency (extended from 3 months on 5/6/2020 and 5 months on 21/08/2020). Applications are open until 31 March 2021

Landlords whose tenants are experiencing financial difficulties due to Coronavirus will receive a six-month mortgage payment holiday (extended from 3 months on 5/6/2020).

At the end of this period, landlords and tenants will be expected to work together to establish an affordable repayment plan, taking into account tenants’ individual circumstances.

From 21 August until at least March 2021 landlords must give renters a notice period of at least 6 months. The exception to this is where there is anti-social behaviour and in cases of domestic abuse.

Commercial tenants

The Coronavirus Bill provides that no business will be forced out of their premises if they miss a rent payment in the six months to 30 September 2020. On 16 September 2020 the government announced an extension to the ban on evictions of commercial tenants to 31 December 2020, with a further extension to 31 March 2021 announced on 9 December 2020.

All commercial tenants in England, Wales and Northern Ireland are eligible.

Business taxes: Time to Pay

All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service.

These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

It is essential to contact HMRC and make a Time To Pay agreement before the tax debt becomes due.

Empty property and business rates relief

Under the government’s existing rates relief policy, landlords do not have to pay business rates on empty buildings for three months.

The Expanded Retail Discount scheme gives local authorities discretion to allow a business rate holiday to retail, hospitality, leisure and child nursery businesses.

Making Tax Digital for Income Tax

It was originally proposed that this new tax accounting system would commence in April 2020.

It is now postponed until at least 2021. In the meantime, HMRC’s MTD for Income Tax pilot scheme is up and running and this may be an ideal time to try it out and get your systems in place.