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Kay Baxter :: Wednesday 25th March 2020 :: Latest Blog Posts


Coronavirus - 8th update - 29 June 2020

 

Update on the Self-Employed Income Support Scheme (SEISS)

 

The scheme currently allows you to claim a taxable grant worth 80% of your average monthly trading profits, paid out in a single instalment covering 3 months' worth of profits, and capped at £7,500 in total.

If you are eligible and your business has been adversely affected you must make your claim for the first grant on or before 13 July 2020.

This scheme is being extended. If you are eligible for the second and final grant, and your business has been adversely affected on or after 14 July 2020 you will be able to make a claim in August 2020. You can claim for the second grant even if you did not make a claim for the first grant.

The government will work out your eligibility the same way as the first grant. If you make a claim for the second grant you will have to confirm your business has been adversely affected on or after 14 July 2020.

This grant will be a taxable grant worth 70% of your average monthly trading profits, paid out in a single instalment covering a further 3 months' worth of profits, and capped at £6,570 in total.

You can claim for the second and final grant even if you did not make a claim for the first grant.

Finally, claims for the first quarter (March-May 2020) will close on 13 July 2020.

 

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Coronavirus – 7th update – 1 June 2020

 

Self-employed and Job Retention Scheme changes as announced by Rishi Sunak on 29 May 2020

 

Self-Employed Income Support Scheme (SEISS)

 No doubt due to recent lobbying by the press and other interested support groups, the Chancellor has extended the SEISS for a final three-month period to 31 August 2020.

This means that the self-employed who are eligible to claim will have received six months financial support from government.

As before, applicants will have to wait until the last month of the claim period, August 2020, to make a claim.

A bullet-point summary of the changes is set out below:

  • SEISS Extended for three months to 31 August 2020.
  • Applications covering June to August 2020 period will open in August.
  • Grant available will be 70% of eligible earnings (previous quarter 80%).
  • Maximum grant for the three months will be £6,570 (previous quarter £7,500) paid in a single instalment.
  • Eligibility criteria remains unchanged.
  • A self-employed person can claim for the second grant, to August 2020, even if they had not claimed for the first grant.
  • More information on these changes will be published on 12 June 2020.

If you are eligible to make a claim for this second grant under the scheme you will still be subject to the same rules regarding eligibility. You will need to confirm that your business has been adversely affected by the coronavirus outbreak.

If you did not claim for the first quarter, to May 2020, as your business at that time was not adversely affected, but will be affected in the quarter to 31 August 2020, it will be possible to claim for the second quarter.

And finally, claims for the first quarter (March-May 2020) will close on 13 July 2020.

 

Coronavirus Job Retention Scheme (CJRS)

 As previously announced, the CJRS has been extended to 31 October 2020 and will be changed to a flexible arrangement from 1 July 2020 to allow employees to resume part-time working.

The Chancellor and his advisers will be gritting their teeth as drawing a line in the sand by tapering and then closing the CJRS on 31 October 2020 will force the hand of employers to consider their options. It is likely that redundancies will start to climb from that date as will the number of the unemployed.

A bullet-point summary of the changes announced is set out below:

  • The CJRS will close to new entrants on 30 June 2020. The final date employers can furlough staff for the first time will be 10 June 2020.
  • From 1 July 2020, employers can bring back employees to work part-time, for any amount of time and any shift pattern. Any claim under CJRS will be limited to normal hours not worked.
  • June/July 2020 – government will continue to pay 80% of costs up to £2,500 cap.
  • August 2020 – government will pay 80% of wages up to £2,500 cap, but employers will have to cover employers' NIC and pension costs for the hours the employee does not work.
  • September 2020 – government will pay 70% of wages up to reduced £2,187.50 cap. Employers will pay employers' NIC, pension costs and 10% of wages to a total cap of £2,500.
  • October 2020 - government will pay 60% of wages up to reduced £1,875 cap. Employers will pay employers' NIC, pension costs and 20% of wages to a total cap of £2,500.
  • The cap will be proportional to hours not worked.
  • The CJRS will be closed-down 31 October 2020.

The above changes to a flexible approach cloak a raft of detail that the government is not publishing until 12 June 2020. Those responsible for making CJRS claims will need to wait for these further clarifications as they will explain how employers should calculate claims.

We will be integrating the changes into our payroll services when they are available and will contact clients if further details regarding part-time working are to be introduced.

Clearly, there are planning considerations.  Please call if you have employees on furlough and you need to consider your options; for part-time working up to 31 October and longer-term considerations after this date.

 

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Coronavirus – 6th update – 2 April 2020

 

Following the Chancellor's original statement setting out a package of temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by COVID-19, further guidance is now coming out.

 

Support for businesses through the Coronavirus Job Retention Scheme

The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least 3 months starting from 1 March 2020. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).

Employers can claim for 80% of furloughed employees' (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period.

The scheme is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.

Further clarification has been received that the employee will need to be on the payroll at 28 February 2020, not if a job offer was made before this date, as originally thought.

We are still waiting for clarification as to whether directors can be furloughed. As with employees who are being furloughed no work must be undertaken for that employer. This means that if a director furloughs themselves as an employee of the Company, no work must be done, this includes answering emails/telephone calls. Statutory tasks can be undertaken, but we are waiting further clarification on this. We must point out that the amount to be received would be the salary element only and not the dividend element.

If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan. Please see below.

 

Support for businesses through deferring VAT payments

The Government will support businesses by deferring Valued Added Tax (VAT) payments for 3 months.

If you're a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to:

  • defer the payment until a later date
  • pay the VAT due as normal

If you wish to defer the payment until a later date, please remember to cancel the direct debt.

If you're in temporary financial distress because of COVID-19 more help is available from HMRC's Time to Pay scheme. This relates to corporation tax or PAYE. The number has changed to 0800 024 1222.

 

Support for businesses through deferring Self-Assessment payments on account

If you are due to pay a self-assessment payment on account by 31 July 2020 but the impact of the coronavirus causes you difficulty in making payment by that date, then you may defer payment until January 2021.

If you are due to pay your second self-assessment payment on account on 31 July this can be deferred until 31 January. You do not need to be self-employed to be eligible for the deferment.

The deferment is optional. If you are still able to pay your second payment on account on 31 July you should do so.

This is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment until 31 January 2021.

During the deferral period you can set up a budget payment plan to help you pay the deferred payment on account when it comes due.

Alternatively, if you are in temporary financial distress because of COVID-19 more help is available from HMRC's Time to Pay scheme.

 

Support for self-employed through the Self-employment Income Support Scheme

The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19).

This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed. This will be based on your last three years profits and averaged over the three years. The maximum profits will be £50,000. This is automatic and HMRC will be notifying those eligible for the scheme. Further information can be found at:

Claim a grant through the Self-employment Income Support Scheme.

 

Support for businesses who are paying sick pay to employees

Legislation has been brought forward to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:

  • this refund will cover up to 2 weeks' SSP per eligible employee who has been off work because of COVID-19
  • employers with fewer than 250 employees will be eligible - the size of an employer will be determined by the number of people they employed as of 28 February 2020
  • employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
  • employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 onlineand those who live with someone that has symptoms can get a note from the NHS website
  • eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force
  • the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible

You are eligible for the scheme if:

  • your business is UK based
  • your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020

 

Support for retail, hospitality and leisure businesses that pay business rates

There will be an introduction of a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.

Eligibility

You are eligible for the business rates holiday if:

  • your business is based in England
  • your business is in the retail, hospitality and/or leisure sector

Properties that will benefit from the relief will be occupied properties that are wholly or mainly being used:

  • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • for assembly and leisure
  • for hospitality, as hotels, guest & boarding premises or self-catering accommodation

More information on eligibility is set out in the expanded retail discount guidance.

How to access the scheme

There is no action for you. However, local authorities may have to reissue your bill to provide this support. They will do this as soon as possible.

 

Cash grants for retail, hospitality and leisure businesses

The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.

Businesses in these sectors with a property that has a rateable value of up to £15,000 may be eligible for a grant of £10,000.

Businesses in these sectors with a property that has a rateable value of over £15,000 and less than £51,000 may be eligible for a grant of £25,000.

Eligibility

You are eligible for the grant if:

  • your business is based in England
  • your business is in the retail, hospitality or leisure sector
  • your business has a rateable value of under £51,000

Properties that will benefit from the relief will be occupied properties that are wholly or mainly being used:

  • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • for assembly and leisure
  • as hotels, guest and boarding premises and self-catering accommodation

How to access the scheme

You do not need to do anything. Your local authority will write to you if you are eligible for this grant.

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority.

 

Support for nursery businesses that pay business rates

The introduction of a business rates holiday for nurseries in England for the 2020 to 2021 tax year.

Eligibility

You are eligible for the business rates holiday if:

  • your business is based in England

Properties that will benefit from the relief will be hereditaments:

  • occupied by providers on Ofsted's Early Years Register
  • wholly or mainly used for the provision of the Early Years Foundation Stage

How to access the scheme

There is no action for you. However, local authorities may have to reissue your bill to provide this support. They will do this as soon as possible.

 

Support for businesses that pay little or no business rates

The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.

Eligibility

You are eligible if:

  • your business is based in England
  • you are a business that occupies property
  • you are receiving small business rate relief or rural rate relief as of 11 March

How to access the scheme

For Dorset businesses you need to apply by following this link:

https://www.dorsetcouncil.gov.uk/emergencies-severe-weather/emergencies/coronavirus/business-and-employers/coronavirus-business-support-grant-funding.aspx

For Wiltshire and Hampshire businesses we understand that the relevant Councils have written to you. Once you receive this letter you will need to complete and online form

 

Support for businesses through the Coronavirus Business Interruption Loan Scheme

The temporary Coronavirus Business Interruption Loan Scheme supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.

The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.

The government will provide lenders with a guarantee of 80% on each loan (subject to pre-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The scheme will be delivered through commercial lenders, backed by the government-owned British Business Bank.

There are 40 accredited lenders able to offer the scheme, including all the major banks.

Eligibility

You are eligible for the scheme if:

How to access the scheme

The scheme is now open for applications. All major banks are offering this scheme.

To apply, you should talk to your bank or one of the 40 accredited finance providers (not the British Business Bank) as soon as possible, to discuss your business plan. You can find out the latest on the best ways to contact them via their websites. Please note that branches may currently be shut down to enable social distancing.

The full rules of the scheme and the list of accredited lenders are available on the British Business Bank website.

If you have an existing loan with monthly repayments, you may want to ask for a repayment holiday to help with cash flow.

We understand there are changes to the way businesses can access this and we will update you when these have been announced.

 

Support for businesses paying tax: Time to Pay service

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.

Eligibility

You are eligible if your business:

  • pays tax to the UK government
  • has outstanding tax liabilities

How to access the scheme

If you have missed a tax payment or you might miss your next payment due to COVID-19, please call HMRC's dedicated helpline: 0800 024 1222.

 

Commercial insurance

Most commercial insurance policies are unlikely to cover pandemics or unspecified notifiable diseases, such as COVID-19.

However, those businesses which have an insurance policy that covers government ordered closure and pandemics or government ordered closure and unspecified notifiable disease should be able to make a claim (subject to the terms and conditions of their policy).

Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers.

Just to ensure you do not reduce your level of cover for employer's insurance and also have you notified your insurance company if your premises are not being occupied.

 

Protection from eviction for commercial tenants

Commercial tenants who cannot pay their rent because of COVID-19 will be protected from eviction.

These measures will mean no business will automatically forfeit their lease and be forced out of their premises if they miss a payment up until 30 June.

There is the option for the government to extend this period if needed.

This is not a rental holiday. All commercial tenants will still be liable for the rent. Commercial tenants are protected from eviction if they are unable to pay rent.

Eligibility

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

How to access the scheme

The change will come into force when the Coronavirus Bill receives Royal Assent. No action is required.

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Coronavirus – 5th update – 28 March 2020

 

Job retention scheme (JRS) and Company Directors

The sharp slowdown in business activity has meant many employers have no work for employees and cannot afford to keep them on. To prevent a huge number of lay-offs/redundancies, the UK government is to cover a large share of the wages of inactive employees who would otherwise have been laid-off or made redundant. Through the Coronavirus Job Retention Scheme (the Scheme), inactive employees will remain employees of a company or business but will be placed on "furlough" – paid leave of absence.

Coronavirus Job Retention Scheme – Key aspects, as of 26 March 2020

NOTE: as at today's date we are still waiting for some details to be provided as to how the Scheme will work. Not all questions have a definitive answer. This note is an indication of how we believe the Scheme will operate but at this stage it is only guidance and not definitive advice.

  • The Scheme is being operated by HMRC. A portal will be set up through which employers will be able to reclaim salary subject to the terms of the Scheme. No one is yet clear how long this will take to set up as it is being built from scratch. The expectation is that it will be up and running towards the end of April 2020.
  • The Scheme is available to all employers operating a PAYE scheme. This includes private, charitable and not-for-profit companies.
  • Through the portal the employer will send HMRC details of all employees who have been furloughed together with their salary details.
  • Current thinking is that the Scheme will cover all employees on the payroll as at the end of February 2020 plus those individuals who have received a genuine offer of employment to commence employment after that date.
  • Until an employee is furloughed the employer remains responsible for payment of salary in accordance with the contract of employment.
  • Once furloughed, an employee must not perform any work for the employer.
  • Actual monies will be paid as a reimbursement grant to the employer. The Government says payments should start before the end of April 2020, but this depends on when the portal is operational.
  • The Scheme covers 80% of the employee's salary, up to a maximum support payment of £2,500 per month.
  • Employees will remain on the payroll and employers will deduct tax and the employee's NI in the normal way.
  • The employer is not mandated to pay the other 20% of the employee's salary but unless there is a lay-off clause in the contract of employment entitling the employer to reduce or not pay salary, consent will have to be obtained from the employee to a 20% reduction of salary.
  • If employers want to top up salaries, they can but they will not be reimbursed for more than 80% of £3,125 - £2,500.
  • If an employee's total salary is reduced as a result of the Scheme, they may be able to make a claim through the welfare system, including Universal Credit.
  • The Scheme is backdated to support employees inactive since 01 March 2020.
  • The Scheme will initially operate for three months from 01 March 2020.
  • The UK Government has the right to audit the Scheme, including retrospectively, and recoup payments made in fraudulent or erroneous circumstances.
  • Current thinking is that employers will not be able to furlough employees on a rota but this may depend on the circumstances and the needs of the business.
  • If an employee is working reduced hours, the employer cannot claim under the Scheme so as to 'top up' salary.
  • Holiday will continue to accrue during furlough leave.
  • HMRC is still assembling the Scheme infrastructure. To maintain cashflow in the interim period, businesses should access the Coronavirus Business Interruption Loan Scheme. Alternatively, they could request employees to defer payment until the Scheme is in place.

How to furlough employees

  • The employer must first determine whether the situation leaves no option but to lay-off employees or make them redundant.
  • The employer must then inform the affected employee(s) of the decision to furlough them. Relevant clauses in the contract of employment will still apply. There may be need for negotiation and written agreement, particularly if an employer is requiring the furloughed employee to take a 20% reduction in salary.
  • The employer must then use a new HMRC portal (in production) to register the names and salary details of furloughed employees (Remember – the government will pay up to £2,500 per month).
  • The UK government says the first reimbursement payment should start being distributed before the end of April 2020.

Can a director furlough themselves?

As part of their efforts to keep their businesses afloat, company directors may consider placing themselves on furlough. This raises a number of issues:

  • The Coronavirus Job Retention Scheme only supports permanent employees. An executive director is usually the most senior contracted permanent employee of a business, so would qualify. Non-executive directors are not permanent employees, so would not qualify.
  • Furloughed employees must not perform any work for the employing business – few company directors can meet the requirement to remain entirely inactive. Depending on the size and needs of the company, it may be possible to furlough one or more directors but the position is not clear as they will continue to have statutory and fiduciary duties as directors.
  • Directors paid a nominal salary but receiving the bulk of their reward through dividends would only receive 80% of the nominal salary (if they qualify). Payment-by-dividends is not supported by the Scheme.

From the IoD Directors Advisory Service – Any director considering their own furlough must have proof that they are a PAYE employee of their own business. Many micro-business and SME directors may never have actually contracted to their own business. A director would have to give serious thought to the practicality and consequences of performing no work for their company whilst on furlough.

Obtaining Agreement

In all circumstances it is prudent to obtain an employee's consent to any change. Even where there is a lay-off clause in the contract of employment, consent is a wise precaution because there could be disagreement over how long the lay-off was intended to last.

Example furlough letter (to be amended to your particular circumstances)

Dear xxx

We are writing to confirm our discussions relating to the terms of your continuing employment during the current Coronavirus pandemic. This is a variation of your contract of employment, designed to implement and take advantage of the Government's Coronavirus Job Retention Scheme.

We have agreed that from [ ] you will be on Furlough Leave. This means your contract of employment continues, but you shall not be required to undertake any work for us. We will pay you 80% of your salary subject to a maximum liability to us of £2,500 per month, including employer's national insurance contributions and employer's pension contributions.

We are keeping the situation under review and will maintain contact with you [by email]. Please update us if any of your contact details change.

Your Furlough Leave shall end on the earliest of the following events:

  • The Government's Coronavirus Job Retention Scheme ending,
  • either you or us ceasing to be eligible for funding under that scheme, or
  • us deciding to cancel Furlough Leave and ask you to recommence work.

During your Furlough Leave you may not work for any other organisation, or on your own account. If you do, you must tell us, and you may be liable to repay any sums we have paid you under the scheme if we become liable to repay it to the Government.

[You have agreed that until the Coronavirus Job Retention Scheme is operational (which we understand will be towards the end of April 2020) you will defer payment of your salary. This will be reimbursed to you once the scheme is operational]

If you have any questions, please do not hesitate to contact xxxx.

Please acknowledge safe receipt of this letter and your agreement to its terms. This will enable us to include you in our application under the Coronavirus Job Retention Scheme.

Yours sincerely

ABC Limited

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Coronavirus – 4th update - 26 March 2020

 

You may have heard today the Chancellor announcement for measures to help the self-employed. We have broken this down for you.

What is it?

The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) whose income has been negatively impacted by COVID-19. The scheme will provide a grant to self-employed individuals or partnerships, worth 80% of their profits up to a cap of £2,500 per month.

HMRC will use the average profits from tax returns in 2016-17, 2017-18 and 2018-19 to calculate the size of the grant. The scheme will be open to those where the majority of their income comes from self-employment and who have profits of less than £50,000. The scheme will be open for an initial three months with people able to make their first claim by the beginning of June.

As we understand the position you are still eligible if you are still working.

 

Am I eligible?

To be eligible for the scheme you must meet all the criteria below:

  • Be self-employed or a member of partnership;
  • Have lost trading/partnership trading profits due to COVID-19;
  • File a tax return for 2018-19 as self-employed or a member of a trading partnership. Those who have not yet filed for 2018-19 will have an additional 4 weeks from this announcement to do so;
  • Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID 19) and intend to continue to trade in the tax year 2020 to 2021;
  • Have trading profits of less than £50,000 and more than half of your total income come from self-employment. This can be with reference to at least one of the following conditions:
  •       Your trading profits and total income in 2018/19
  •       Your average trading profits and total income across up to the three years between 2016-17, 2017-18, and 2018-19. We understand that if you have not been trading for the three previous tax years HMRC will average over the number of years you have been trading.

 Please remember that this income will be included within your profit and loss account and you will need to pay income tax and national insurance on any payments received through the scheme.

The grant is also recognised as income for the purposes of Universal Credit and Tax Credits and may impact the amount you are entitled to.

 

How do I access it?

Individuals should not contact HMRC now. HMRC will use existing information to check potential eligibility and invite applications once the scheme is operational. HMRC will then pay the grant directly to eligible claimants' bank account. HMRC is urgently working to deliver the scheme; grants are expected to start to be paid out by beginning of June 2020. For eligible individuals who have not submitted their returns for 2018-19, they will have 4 weeks' notice from the date of the announcement to file their returns and therefore become eligible for this scheme.

 

When can I access it?

HMRC is urgently working to deliver the scheme; grants are expected to start to be paid by the beginning of June 2020. This time is necessary to ensure that the scheme is both deliverable and fair. In the interim the self-employed will still able eligible for other government support including more generous universal credit and business continuity loans.

 

Why does this scheme not cover small businesses who are incorporated?

Self-employed individuals who are owner-managers and pay themselves a salary through PAYE will be eligible for support through the Coronavirus Job Retention Scheme.

SMEs can also access support through the temporary Coronavirus Business Interruption Loan Scheme. This supports SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.

This new Self-Employment Income Support Scheme is open to anyone who reports trading profits through Income Tax Self-Assessment. Self-employed individuals who work through a company do not report their trading profits in this way.

 

Further announcements will be made over the next few days and we will keep you informed as and when we receive these.

If you have any queries/concerns regarding the above, please feel free to give Catherine or Richard a call.

 

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Coronavirus – Furlough and job retention scheme clarification – 23 March 2020

 

As advised in the previous update, the Government has announced its plans for financial assistance to help employers retain employees for an extended period of time, although offering no work, and avoid lay-offs. It is called the Job Retention Scheme and, while little information has been published as to how it will work, we have set out below what we do know, which will be updated as more details are released.

What is the Job Retention Scheme?

It involves employers placing their employees on "furlough". This is a term which is typically used in the US and essentially means putting employees on temporary leave of absence where they do not work and do not receive pay, but are retained on your books to be brought back in when you need them. Employers who do this will be able to obtain a grant from the Government to cover 80% of "furloughed employees" wages, to a maximum of £2,500 per employee per month.

Which employers can access the scheme?

All employers can access it; there is no restriction on size or type.

How do I get the Government grant?

Guidance states that you will need to designate which of your workforce will be furloughed employees and then submit that information to HMRC, along with each employee's earnings. You will then receive a grant to cover the 80% wages. More information is awaited from the Government on the online portal to be used to submit the information and what other information may be needed. The Chancellor has stated he hopes the first grants will be paid by the end of April 2020, and they will be backdated to 1 March 2020. The scheme is initially intended to run for three months but may be extended.

Which employees can be furloughed?

Any employee can be furloughed. They need to be on PAYE in order for you to be able to claim the grant for their wages. Guidance states that your ability to furlough an employee depends on their contract. It is not likely that employee contracts will include a specific right to use furlough.

However, contracts which contain a right to lay off employees on no pay already give you the right to send employees home and not pay them for a temporary period and so can likely be used to furlough employees.

The difference is that employees on lay off will receive, subject to service criteria, statutory guarantee pay (SGP) whereas furloughed employees will receive 80% of their wages. SGP is £29 per day for a maximum of five days in a rolling 13-week period, so furlough offers the employee a much more favourable option in terms of pay. If contracts do not contain a right to unpaid lay off, you can ask the employee to agree to furlough. Although 80% of wages may not be an initially attractive option next to full pay, it is likely to be more attractive than redundancy which may be the end result if alternative options cannot be found. It may also be useful for employees who are struggling to find childcare.

If you have already taken the step to utilise lay off, you can get in touch with those employees and agree to change their current status from lay off to furlough. This would simply involve changing their pay arrangements from nothing (if not entitled to SGP), or SGP to 80% wages, as they are already not working.

You need to designate employees as furloughed, which means it is your choice. However, if you are not placing everyone on furlough, you should consider carefully who it should be. Think about whose skills will continue to be in demand through this difficult period.

While you may assume that the best thing to do is furlough those employees labelled as high risk by the Government, forcing them on to furlough without their input, and therefore forcing them on to 80% wages, may result in discrimination claims from those who allege they were made to do it because of their age, disability or pregnancy. Where you need to select employees for furlough, it may be best to ask for volunteers across the workforce and if any high risk employees, who had previously been risk assessed as fine to still be in work, put themselves forward, it may well be appropriate to choose them first. There does not appear to be a maximum or minimum number of employees who can be furloughed.

Can I furlough employees who are on short-time working?

Furlough requires the employee to not carry out any work, so short-time working could not continue during furlough. However, consider whether you could re-organise reduced work patterns to allow for some of those on short-time working to go back to full hours and the others to be furloughed. You should discuss this with employees first.

If I put employees on furlough and I get a grant to cover 80% of their wages, do I have to make up the other 20%?

No, there is no requirement to do this, but you can if you wish.

What about zero hours employees who have no standard wages? How will the 80% be calculated?

There is no clarity on this yet, but the Chancellor said the intention was to try to cover as broad a group of people as possible.

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Coronavirus – 3rd update – 21 March 2020

 

As you may have heard last night, the Chancellor announced further measures to help businesses:

Coronavirus Job Retention Scheme

All UK employers will be able to access support to continue paying part of their employees' salary for those employees that would otherwise have been laid off during this crisis.

How to access the scheme:

  • Designate affected employees as "furloughed workers" and notify your employees of this change. Take care in changing the status as this is still subject to employment law and depending on the employment contract, may be subject to negotiation. The definition of "furlough" is to allow or force someone to be absent temporarily from work.
  • Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal – more information is due from HMRC

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.

If your business needs short term cash flow support, you may be eligible for a Coronavirus Business Interruption Loan – see below

 

Deferring VAT and Income Tax Payments

The Government will support businesses by deferring VAT payments for 3 months – deferral will apply from 20 March 2020 until 30 June 2020. Please bear in mind this is only a deferral.

Self-employed the July income tax payment will be deferred to January 2021.

 

Businesses who are paying sick pay to employees

Employers will be able to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility for the scheme is:

  • The refund will cover up to 2 weeks' SSP per eligible employee who has been off work because of COVID-19
  • Employers will be able to reclaim expenditure for any employee who has claimed SSP as a result of COVID-19
  • Employers should maintain records of staff absences and payments of SSP. Employees will not need to provide a GP fit note. If employers need evidence then employees can obtain an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from NHS website

How to access this a rebated scheme is being developed.

 

Support for business that pay business rates

Retail, hospitality and leisure businesses

As advised previously there will be a business rates holiday for retail, hospitality and leisure businesses. This is mainly:

            Shops; restaurants; cafes; drinking establishments; cinemas and live music venues

            Assembly and leisure

            Hotels, guest and boarding premises and self-catering accommodation

No action to access the scheme. This will apply to your next bill in April 2020.

Cash grants for retail, hospitality and leisure businesses

A cash grant of up to £25,000, for businesses with a rateable value of between £15,001 and £51,000.

A cash grant of up to £10,000, for businesses with a rateable value of less than £15,000.

No action is required to access the scheme.

Businesses that pay little or no business rates

 A one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs. You must be in receipt of the Small Business Rate Relief or the Rural Rate Relief to be eligible.

No action is required to access the scheme.

 

Coronavirus Business Interruption Loan Scheme

A new temporary Coronavirus Business Interruption Loan Scheme delivered by the British Business Bank will be launched early next week.

Businesses can access the first 12 months of the finance interest free.

To be eligible your business needs to meet the British Business Bank eligibility criteria.

To access the scheme and to find out the full rules of the Scheme, details are located on the British Business Bank website - https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/

 

Time to pay service

Any business or self-employed person in financial distress, you may be eligible to receive support with their tax affairs through HMRC's Time To Pay service.

If you have missed a tax payment or might miss your next payment due to COVID-19, please call HMRC's dedicated helpline 0800 0159 559.

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Coronavirus – 2nd update - 18 March 2020

 

As you may have heard, the Chancellor announced yesterday the following measures to help small businesses:

Hotels/pubs/retail

  1. If you have pandemic insurance, then you should be able to claim under your insurance policy.
  1. No business rates even if your rateable value exceeds £51,000.
  1. You will be able to receive a cash grant of up to £25,000 per business.  You will need to apply to your local authority to receive this.  Guidance for local authorities on the application of this will be available by 20 March 2020.   This is with a rateable value between £15,000 and £51,000.

Other small businesses

  1. No business rates.
  1. Cash grants of up to £10,000 per business.  Apparently, it appears that you do not need to apply as you will be contacted by your local authority.  Funding for the scheme will be provided to local authorities by government in early April.

Both

  1. If you must pay your staff statutory sick pay, then you can claim this back from HMRC. 
  1. There will be an interest free loan for 6 months.
  1. If you have difficulty in paying outstanding tax liabilities, you may be able to receive support through HMRC's Time to Pay service.  If this is the case, please call the COVID-19 dedicated helpline on 0800 0159 559.

Individuals

  1. Your lender should allow you to have a 3-month payment holiday without penalties.

 

We will keep you updated as and when this is updated.

However, if you do have any queries/concerns then please feel free to get in touch.

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Coronavirus – 1st update - 17 March 2020

 

The Budget, announced on 11 March, contained several measures to enable some businesses to preserve cash and to prevent insolvency. These measures included -

  • HMRC to provide assistance through the delay of collection of tax bills (i.e. PAYE, NI, VAT and CT) through the launch of a new 'time to pay' HMRC Coronavirus Helpline number - 0800 0159 559.
  • Business rates being abolished for one year for small firms in the retail, leisure and hospitality sectors.  There is a £5,000 business rates discount for pubs with a rateable value below £100,000 in England.
  • The 700,000 smallest businesses who are already exempt from paying rates are now eligible for £3,000 in grants to help meet business costs.
  • A Coronavirus Business Interruption Scheme has been launched, under which the government guarantees debt to encourage lenders to give loans to companies that would otherwise be deemed too risky. The scheme will delivered by the British Business Bank with more than 40 lenders providing funds as terms loans, overdrafts or asset based lending secured on invoices or equipment.
  • The reimbursement of sick pay costs for up to 14 days, which is just under £200 per employee.

 

However, over the next few weeks it may well take more than just the above to keep a business afloat. You should also consider the following -

  • Focus on debt collection. We are already hearing of some companies introducing a policy of delaying payment to their suppliers to preserve their own cash position. You should therefore focus on recovering their larger outstanding debtor balances and in particular, seeking payment of monies due from larger companies who may have the flexibility to accommodate requests for early payment. You should take the time to explain to larger companies that they should speed up supplier payments to ease the cash crisis facing smaller businesses.
  • Where debts are proving difficult to collect, you should incorporate and familiarise themselves with a debt recovery process and should not feel inhibited about issuing proceedings against perhaps a major customer.
  • Asset finance. Whether it be through an existing or new lender, you should establish if there is the ability to raise finance on unencumbered or existing part financed assets including property, chattels, stock, machinery etc.
  • You should approach your existing bank. There is never a good time to have these difficult conversations, but if not now, when? Banks are offering holidays on loan repayment and are encouraging customers to get in touch to discuss options. Some banks, including Lloyds and Nat West, have already outlined funding packages worth £2bn and £5bn for small businesses.
  • Consider emergency funding from alternative finance providers. Peer to peer borrowing has become very popular, but usually comes with strings attached, such as high interest rates, short repayment terms and the need for personal guarantees. You should be cautious about the ease with which such borrowing appears to be easily available and should probably consider this as something of a last resort. Using a reputable Commercial Finance Broker will provide appropriate access to such funds and they will assist in finding the right type of finance for you.
  • Rent. I suspect some landlords will be expecting a call from their tenants to request a rent holiday or change in payment terms. From your perspective, there is never a good time to have these difficult conversations but it is a valid form of easing cashflow and should be considered.
  • Focus on cost cutting measures, including elimination of non-essential overheads, reduce staff costs, amend supplier payment terms, reduced opening hours, etc.