From 1‌‌ September HMRC will now pay 70% of usual wages up to a cap of £2,187.50 per month for the hours furloughed employees do not work.

What you need to do now

• • Continue to pay your furloughed employees at least 80% of their usual wages for the hours they do not work, up to a cap of £2,500 per month. You will need to fund the difference between this and the CJRS grant yourself.
  • The caps are proportional to the hours not worked. For example, if your employee is furloughed for half their usual hours in September, you are entitled to claim 70% of their usual wages for the hours they do not work up to £1,093.75 (50% of the £2,187.50 cap).
  • Continue to pay furloughed employees’ National Insurance and pension contributions from your own funds.

Fraudulent claims

HMRC have started to investigate CJRS claims where fraud is suspected. HMRC will be paying particular attention to claims that differ from the PAYE data they hold and where they have received reports of fraud. Employees are being encouraged to report their employer if they have reason to believe that they are abusing the scheme. They can do this anonymously.

Protect yourself from scams

Stay vigilant about scams, which may mimic government messages as a way of appearing authentic and unthreatening. Search ‘scams’ on GOV‌.UK for information on how to recognise genuine HMRC contact. You can also forward suspicious emails claiming to be from HMRC to phishing@hmrc.gov.uk and texts to 60599.

I hope this information helps you and your business. We’ll continue to keep you updated on scheme developments over the coming weeks.

1. Scheme overview
The Chancellor of the Exchequer, Rishi Sunak, presented his ‘Plan for Jobs’ to Parliament on Wednesday 8 July 2020 outlining how the government will support the UK’s economic recovery while continuing to prioritise people’s health. As part of this, the government is introducing a new Job Retention Bonus to provide additional support to employers who keep on their furloughed employees in meaningful employment, after the government’s Coronavirus Job Retention Scheme ends on 31 October 2020.

The Job Retention Bonus is a one-off payment to employers of £1,000 for every employee who they previously claimed for under the scheme, and who remains continuously employed through to 31 January 2021. Eligible employees must earn at least £520 a month on average between the 1 November 2020 and 31 January 2021. Employers will be able to claim the Job Retention Bonus after they have filed PAYE for January and payments will be made to employers from February 2021.

2. Which employers can claim the Job Retention Bonus
An employer will be able to claim the Job Retention Bonus for any employees that were eligible for the Coronavirus Job Retention Scheme and they have claimed a grant for. Where a claim for an employee was incorrectly made, a Job Retention Bonus will not be payable.
All employers are eligible for the scheme including recruitment agencies and umbrella companies.
Employers should ensure that they have:

• complied with their obligations to pay and file PAYE accurately and on time under the Real Time Information (RTI) reporting system for all employees
• maintained enrolment for PAYE online
• a UK bank account

Employers must keep their payroll up to date and accurate and address all requests from HMRC to provide missing employee data in respect of historic Coronavirus Job Retention Scheme claims. Failure to maintain accurate records may jeopardise an employer’s claim.

HMRC will withhold payment of the Job Retention Bonus where it believes there is a risk that Coronavirus Job Retention Scheme claims may have been fraudulently claimed or inflated, until the enquiry is completed.

2.1 Employers that have employees who have been transferred under TUPE or due to a change in ownership
A new employer may be eligible to claim the Job Retention Bonus in respect of employees of a previous business which were transferred to the new employer if either TUPE applies, or the PAYE business succession rules apply to the change in ownership. A new employer may also be eligible to claim the Job Retention Bonus in respect of the employees associated with a transfer of business from the liquidator of a company in compulsory liquidation where TUPE would have applied were it not for the company being in compulsory liquidation.

To claim the Job Retention Bonus under these circumstances the transferred employees must have been furloughed and successfully claimed for under the scheme by their new employer. An employer will not be eligible for the Job Retention Bonus in respect of any employee transferred under TUPE or under the business succession rules after 31 October 2020.

3. Which employees an eligible employer can claim the Job Retention Bonus for
Claims will only be accepted for employees that were eligible for the scheme. Where a claim for an employee was incorrectly made, a Job Retention Bonus will not be payable.

Employers will be able to claim for employees who:

• were furloughed and had a Coronavirus Job Retention Scheme claim submitted for them that meets all relevant eligibility criteria for the scheme
• have been continuously employed by the relevant employer from the time of the employer’s most recent claim for that employee until at least 31 January 2021
• have been paid an average of at least £520 a month between 1 November 2020 and 31 January 2021 (a total of at least £1,560 across the 3 months). The employee does not have to be paid £520 in each month, but must have received some earnings in each of the three calendar months that have been paid and reported to HMRC via RTI;
• have up-to-date RTI records for the period to the end of Januar
• are not serving a contractual or statutory notice period, that started before 1 February 2021, for the employer making a claim

Employers can claim the Job Retention Bonus for all employees who meet the above criteria, including office holders, company directors and agency workers, including those employed by umbrella companies. The above criteria must be met regardless of the frequency of the employee’s pay periods, their hours worked and rate of pay.

3.1 What earnings can be included in the £520 a month average minimum earnings threshold
Only earnings recorded through HMRC Real Time Information (RTI) records can count towards the £520 a month average minimum earnings threshold.

For an employee to be eligible, employees must have been paid at least £520 a month on average between 1 November 2020 and 31 January 2021.

Detailed guidance will be published in September 2020.

3.2 Employees who have returned from statutory parental leave
If an employee was on statutory parental leave, returned after 10 June 2020 and was claimed for under the scheme then the employer will be able to claim the Job Retention Bonus in respect of that employee provided the other eligibility criteria are met.

3.3 Employees who are military reservists returning to work
If an employee was mobilised as a military reservist, returned after 10 June 2020 and was claimed for under the scheme then the employer will be able to claim the Job Retention Bonus in respect of that employee provided the other eligibility criteria are met.

3.4 Employees who are on fixed term contracts
If an employee is on a fixed term contract and was claimed for under the scheme then their employer can claim the Job Retention Bonus in respect of that employee provided the other eligibility criteria are met.

Contracts can be extended or renewed without affecting eligibility for the bonus, provided that continuous employment is maintained.

4. How employers can claim the Job Retention Bonus

4.1 When employers will be able to claim the Job Retention Bonus
From February 2021, employers will be able to claim the Job Retention Bonus through GOV.UK. More detail about this process will be published in guidance by the end of September 2020.

4.2 How much employers will be able to claim
The Job Retention Bonus will be a one-off payment of £1,000 to the employer for every eligible employee that is claimed for. The bonus will be taxable, so the business must include the whole amount as income when calculating their taxable profits for Corporation Tax or Self-Assessment.

4.3 What employers should do now if they intend to claim the Job Retention Bonus
Employers should ensure that their employee records are up-to-date, including accurately reporting their employee’s details and wages on the Full Payment Submission (FPS) through the Real Time Information (RTI) reporting system. Employers should also make sure all of their Coronavirus Job Retention Scheme claims have been accurately submitted and any necessary amendments have been notified to HMRC.

Yesterday the Chancellor announced the introduction of the Job Retention Bonus.

This is a one-off payment of £1,000 to employers that have used the Coronavirus Job Retention Scheme (CJRS) for each furloughed employee who remains continuously employed until 31‌‌‌ ‌January 2021. The bonus will provide additional support to retain employees.

To be eligible, employees will need to:

• earn at least £520 per month (above the Lower Earnings Limit) on average for November, December and January
• have been furloughed by you at any point and legitimately claimed for under the Coronavirus Job Retention Scheme
• have been continuously employed by you up until at least 31‌‌‌ ‌January 2021.

Employers will be able to claim the bonus from February 2021 once accurate RTI data to 31‌‌‌ ‌January has been received. More information about this scheme will be available by 31‌‌‌ ‌July and full guidance will be published in the Autumn.

Other new measures announced

The Chancellor also announced other measures, including:

• the Eat Out to Help Out Scheme – during August, diners can get 50% off Monday to Wednesday on meals and non-alcoholic drinks, up to £10 per person, when eating at participating
• restaurants, bars, cafes and other establishments that have registered
• VAT reduction – from 15‌‌‌ ‌July until 12‌‌‌ ‌January 2021, the UK government will cut VAT from 20% to 5% on any eat-in or hot takeaway food and drinks from restaurants, cafes and pubs, excluding alcohol. This VAT reduction also applies to all holiday accommodation in hotels, B&Bs, campsites and caravan sites, as well as attractions like cinemas, theme parks and zoos
• an increase in the Stamp Duty Land Tax (SDLT) threshold in England and Northern Ireland – increasing the threshold under which no SDLT is paid on the purchase of a main home from £125,000 to £500,000, with immediate effect until 31‌‌‌ ‌March 2021.

Updates on CJRS scheme

We would also like to make you aware of some key dates on the CJRS scheme that might affect you:

Claiming for employees furloughed on or before 30‌‌‌ ‌June

You need to claim by 31‌‌‌ ‌July for employees furloughed through the Coronavirus Job Retention Scheme (CJRS) for periods ending on or before 30‌‌‌ ‌June.

Get ready for changes from 1‌‌‌ ‌August

You will no longer be able to use a CJRS grant to cover National Insurance (NI) and pension contributions for furloughed employees from 1‌‌‌ ‌August. You can submit your August claim in advance, from 20‌‌‌‌‌‌ ‌July.

Made a mistake on your claim?

You can now delete a claim online within 72 hours of submitting it. Search ‘claim for wages through Coronavirus Job Retention Scheme’ on GOV‌‌‌.UK.

Calls to customers

HMRC are contacting selected employers to discuss their claims. These calls will be to check they haven’t made any mistakes and to help make sure they’re claiming the correct amount.

Protect yourself from scams

Stay vigilant about scams which may mimic government messages as a way of appearing authentic and unthreatening.

I hope this information helps you and your business, and we’ll continue to keep you updated on scheme developments over the coming weeks.

The government deferred VAT payments between 20 March and 30 June to help during these unprecedented times. What do you need to do now?

Time to take action

The VAT payment deferral period ended on 30 June 2020. This means you’ll need to:

• set-up cancelled direct debits as soon as possible to ensure you meet the next payment deadline
• continue to submit VAT returns as normal, and on time
• pay the VAT in full on payments due after 30 June

Any VAT payments that were due and have been deferred between 20 March and 30 June should be paid in full on or before 31 March 2021.

Still struggling to pay?

If you are unable to pay your VAT liability contact HMRC as soon as possible to set up a payment plan.

We informed you recently to prepare for changes to the Coronavirus Job Retention Scheme (CJRS). This is a reminder that you can start to flexibly furlough eligible employees from 1‌‌‌ ‌July onwards.

From 1‌‌‌ ‌July, you can claim a more flexible grant for any employee you have previously received a CJRS grant for, and who now returns to work on reduced hours. You can also continue to claim for employees who stay fully furloughed.

What you need to do next

• claim for periods ending on or before 30‌‌‌ ‌June, by 31‌‌‌ ‌J‌ul‌y – this is the last date you can make those claims
• agree the hours and shift patterns that you want your employees to work from 1‌‌‌ ‌July
• pay your employees’ wages for the time they’re in work and apply for a job retention scheme grant to cover the remainder of their usual hours for which they are still furloughed
• claim for further furlough periods as needed – the first time you will be able to make a claim for days in July will be 1‌‌‌ ‌July.

What to do if you have overclaimed

Some employers have contacted us to let us know that they have claimed too much. If this applies to you, then all you need to do is tell HMRC when you next claim so you can pay it back. You will be asked when making your claim whether you need to adjust the amount to take account of a previous error. Your new claim amount will be reduced to reflect this. You do not need to take any other action but should keep a record of this adjustment for six years.

If you’ve made an error in a previous claim but do not plan to submit further claims, you need to contact HMRC to let them know, so that they can tell you how to repay the money.

Paying your employer National Insurance Contributions (NICs) and pension contributions

A condition of the CJRS grant is that you pay the related PAYE tax, NICs and pension contributions due on wages. Until 31‌‌‌ ‌July you can continue to claim these for the hours the employee is on furlough. From 1‌‌‌ ‌August employers will no longer be able to claim for NICs and pension contributions.

If you think you may struggle to pay your PAYE tax and/or NICs from August, please contact HMRC as soon as possible, before they start action to recover the unpaid debt. HMRC may be able to give you time to pay.
Protect yourself from scams

Stay vigilant about scams, which may mimic government messages as a way of appearing authentic and unthreatening.

I hope this information helps you and your business, and we’ll continue to keep you updated on scheme developments over the coming weeks.

As part of the government’s support for businesses during COVID-19, HMRC gave businesses the option of deferring their VAT payments if they were unable to pay on time, without incurring late payment interest or penalties. Payment of VAT falling due between 20‌‌ March and 30‌‌ June 2020 can be deferred until 31‌‌ March 2021.

You must continue to file your VAT return on time, even if you defer payment.

We’re writing to remind you that the option to defer paying VAT ends on 30‌‌ June 2020. This means that VAT returns with a payment due date after 30‌‌ June must be paid in full, on time.

If you haven’t deferred any VAT payments, you don’t need to take any further action. If you have deferred paying your VAT and normally pay by Direct Debit you should now reinstate it.

You should do this at least three working days before submitting your VAT return in order for HMRC to take payment.

Remember, any VAT payments you have deferred during this period should be paid in full on or before 31‌‌ March 2021. You can make ad hoc payments or additional payments with your subsequent VAT returns to reduce the amount outstanding, if you wish.

If you’re unable to pay the VAT due and need additional time to pay, please contact HMRC before the payment is due in order to secure a time to pay arrangement.

Just a reminder that HMRC have given you the option to defer your second payment on account if you’re:

• registered in the UK for Self Assessment and
• finding it difficult to make your second payment on account by 31 July 2020 due to the impact of coronavirus

Remember, you can still make the payment by 31 July 2020 as normal if you’re able to do so. However, HMRC will not charge interest or penalties on any amount of the deferred payment on account, provided it’s paid on or before 31 January 2021.

From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time. This is a month earlier than previously announced to help support people back to work. Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them – and will be responsible for paying their wages while in work.

From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work. That means that for June and July the government will continue to pay 80% of people’s salaries. In the following months, businesses will be asked to contribute a modest share, but crucially individuals will continue to receive that 80% of salary covering the time they are unable to work.

The scheme updates mean that the following will apply for the period people are furloughed:

• June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
• August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
• September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
• October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.

If you cannot maintain your workforce because your operations have been affected by coronavirus (COVID-19), you can furlough employees and apply for a grant to cover a portion of their usual monthly wage costs where you record them as being on furlough.

From 1 July , employers can bring furloughed employees back to work for any amount of time and any work pattern, while still being able to claim the grant for the hours not worked. From this date, only employees that you have successfully claimed a previous grant for will be eligible for more grants under the scheme. This means they must have previously been furloughed for at least 3 consecutive weeks taking place any time between 1 March and 30 June 2020. For the minimum 3 consecutive week period to be completed by 30 June, the last day an employee could have started furlough for the first time was 10 June. This may differ if you have an employee returning from statutory parental leave.

From 1 August 2020, you will be asked to contribute towards the cost of your furloughed employees’ wages.

HMRC will check claims. Payments may be withheld or need to be paid back if a claim is found to be fraudulent or based on incorrect information. You can report suspected fraud in the Coronavirus Job Retention scheme.

Coronavirus Job Retention Scheme grants are not classed as state aid.

Who can claim

You can claim for any employees you have furloughed if you have:

• furloughed that employee for at least 3 consecutive weeks between 1 March and 30 June 2020
• a UK PAYE scheme started on or before 19 March 2020
• enrolled for PAYE online
• submitted a report under the Real Time Information (RTI) reporting system for that employee on or before 19 March 2020
• a UK bank account

For employees that meet the criteria above, the number of you claim for in any single claim period starting from 1 July cannot exceed the maximum number of employees you claimed for under any claim ending by 30 June.

For example, an employer had previously submitted three claims between 1 March 2020 and 30 June, in which the total number employees furloughed in each respective claim was 30, 20 and 50 employees. Then the maximum number of employees that employer could furlough in any single claim starting on or after 1 July would be 50.

Agreeing to furlough employees

Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

To be eligible for the grant, employers must have confirmed to their employee (or reached collective agreement with a trade union) in writing that they have been furloughed. You must:

• make sure that the agreement is consistent with employment, equality and discrimination laws
• keep a written record of the agreement for five years
• keep records of how many hours your employees work and the number of hours they are furloughed (i.e. not working)

The employee does not have to provide a written response and you do not need to place all your employees on furlough.

Prior to 1 July 2020, employees on furlough cannot undertake any work for you other than training. From 1 July, you will be able to:

• only be able to claim for employees who have previously been furloughed for at least 3 consecutive weeks taking place any time between 1 March 2020 and 30 June
• be able to flexibly furlough employees – this means you can bring your employees back to work for any amount of time, and any work pattern
• still be able to claim the furlough grant for the hours your flexibly furloughed employees do not work, compared to the hours they would normally have worked in that period.

If you flexibly furlough employees, you’ll need to agree this with the employee (or reach collective agreement with a trade union) and keep a new written agreement that confirms the new furlough arrangement. You’ll need to:

• make sure that the agreement is consistent with employment, equality and discrimination laws
• keep a written record of the agreement for five years
• keep records of how many hours your employees work and the number of hours they are furloughed (i.e. not working).

You do not need to place all your employees on furlough and you can continue to fully furlough employees if you wish. Employees cannot undertake any work for you during time that you record as them being on furlough.

Using minimum furlough periods

Until 1 July, any employees you place on furlough must be furloughed for a minimum of 3 consecutive weeks. When they return to work, they must be taken off furlough. Employees can be furloughed more than once, but they must be furloughed for a minimum of 3 consecutive weeks each time they are furloughed.

From 1 July, agreed flexible furlough agreements can last any amount of time. Employees can enter into a flexible furlough agreement more than once.

Where a previously furloughed employee starts a new furlough period before 1 July this furlough period must be for a minimum of 3 consecutive weeks. This is the case regardless of whether the 3 consecutive week minimum period ends before or after 1 July.

For example, a previously furloughed employee can start a new furlough period on 22 June which would have to continue for at least 3 consecutive weeks ending on or after 12 July. After this the employee can they can then be flexibly furloughed for any period. However, after 1 July, employers cannot make claims that cross calendar months, so the employer will need to make a seperate claim for the period up to 30 June.

Although flexible furlough agreements can last any amount of time, unless otherwise specified the period that you claim for must be for a minimum claim period of 7 calendar days.

When your employees are on furlough

During hours which you record your employee as being on furlough, you cannot ask your employer to do any work for you that:

• makes money for your organisation or any organisation linked or associated with your organisation
• provides services for your organisation or any organisation linked or associated with your organisation.

Your employee can:

• take part in training
• volunteer for another employer or organisation
• work for another employer (if contractually allowed)

Paying employee taxes and pension contributions

Your employees will still pay the taxes they normally pay out of their wages. This should be done through PAYE using the normal rules.
This includes pension contributions (both employer contributions and automatic contributions from the employee), unless the employee has opted out or stopped saving into their pension. Until 31 July you can continue to claim for these costs for the hours the employee is on furlough. From 1 August employers will be required to pay all employer NICs and pension contributions.

Keeping employee rights

Employees still have the same rights at work, including:

• Statutory Sick Pay
• annual leave
• maternity and other parental rights
• rights against unfair dismissal
• redundancy payments

Grants cannot be used to substitute redundancy payments. HMRC will continue to monitor businesses after the scheme has closed.

Holiday pay

Furloughed employees continue to accrue leave as per their employment contract. The employer and employee can agree to vary holiday entitlement as part of the furlough agreement, however almost all workers are entitled to 5.6 weeks of statutory paid annual leave each year which they cannot go below. Employees can take holiday whilst on furlough. Working Time Regulations require holiday pay to be paid at the employee’s normal rate of pay or, where the rate of pay varies, calculated on the basis of the average pay received by the employee in the previous 52 working weeks. Therefore, if a furloughed employee takes holiday, the employer should pay their usual holiday pay in accordance with the Working Time Regulations. Employers will be obliged to pay employees who are on holiday additional amounts over the grant, though will have the flexibility to restrict when leave can be taken if there is a business need and the correct notice is given. This applies for both the furlough period and the recovery period. If an employee usually works bank holidays then the employer can agree that this is included in the grant payment. If the employee usually takes the bank holiday as leave then the employer would either have to top up their usual holiday pay, or give the employee a day of holiday in lieu. Find out more information on holiday pay during furlough.

Employees working for a different employer

If contractually allowed, your employees are permitted to work for another employer whilst you have placed them on furlough.
For any employer that takes on a new employee, the new employer should ensure they complete the starter checklist form correctly. If the employee is furloughed from another employment, they should complete Statement C.

Before you claim

You will need to work out how much you can claim through the scheme. HMRC will retain the right to retrospectively audit all aspects of your claim.

Employers should discuss with their staff and make any changes to the employment contract by agreement.

Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.

HMRC cannot provide your employees with details of claims you make on their behalf. Please help us by keeping your employees informed, answering any questions that they might have. Please ask them not to contact HMRC.

The government has announced that the self-employed will receive another grant to cover June, July and August if their business has been affected by coronavirus. Are your clients eligible and how can you help them?

Who can get the grant?

Self-employed individuals or members of a partnership are eligible for a grant representing up to 70% of their average profits if they meet the following criteria:

• they submitted a tax return for 2018/19
• their business traded during 2019/20
• their business is continuing to trade, or would be except for coronavirus
• they intend to continue trading in 2020/21
• they have lost trading/partnership trading profits due to coronavirus
• their trading profits were less than £50,000 and represented more than half of their total taxable income.

How much will they be paid?

Individuals will get a taxable grant which will be 70% of the average profits from the tax years 2016/17 to 2018/19. If they became self-employed during those years, HMRC will use the average for the years they submitted tax returns for. The maximum amount is £2,250 per month for three months, so to get the full amount your client would need to have average profits of £38,570 per annum. Applications for this second and final grant will open in August.

Can clients apply if they haven’t claimed the first grant?

Absolutely, individuals can continue to apply for the first grant until 13 July 2020. They don’t need to have claimed the first grant to receive the second grant, for example, if their business has only recently been affected by coronavirus.

If your clients were eligible for the first grant, HMRC should have contacted them already. You can check their eligibility here.

If you have a protected early pension age, you can return to your public sector work without losing your status if this is directly in response to the coronavirus, meaning you won’t incur charges.

The Chancellor has just announced major changes to the Coronavirus Job Retention Scheme (CJRS). There’s good news and bad – how might you be affected?

Employer contribution

Under the CJRS currently, you can claim 80% of a furloughed employee’s salary up to £2,500 per month plus employers’ NI and the minimum auto-enrolment pension contribution. From August you will need to start contributing towards the cost of furloughing. This will be on a sliding scale as follows:

• • From August, you will have to pay the employers’ NI and the minimum auto-enrolment pension contribution
  • From September, you will also have to contribute 10% of furlough pay. This means that you will only be able to claim 70% of furlough pay and you must make up the difference so that your furloughed employees continue to receive the 80% minimum.
  • From October, this contribution increases to 20% of furlough pay. This means that you will only be able to claim 60% of furlough pay and you must make up the difference so that your furloughed employees continue to receive the 80% minimum.
  • Flexible furloughing from July. From July, you can ask furloughed employees to work on a part-time basis while remaining on furlough for the rest of the time. This is new, before this date furloughed employees were prohibited from doing any work for you.

Access to the CJRS. From July, the CJRS will only be available to employers that have previously used it in respect of employees they have previously furloughed. The CJRS will therefore close to new entrants from 30 June. From this point onwards, you will only be able to furlough employees that you have furloughed for a full three-week period prior to 30 June. This means that the final date by which you can furlough an employee for the first time will be 10 June, in order for the three-week furlough period to be completed by 30 June.

End date

The Chancellor has confirmed that the CJRS will close on 31 October.

If you have a protected early pension age, you can return to your public sector work without losing your status if this is directly in response to the coronavirus, meaning you won’t incur charges.

Currently there are around 7.5 million people who have been placed on the scheme, which sees the government pay 80% of employees’ wages up to £2,500 a month. Chancellor of the Exchequer Rishi Sunak has extended the Government’s furlough scheme until the end of October.

Announcing the decision in the house of commons today (12 May) Sunak revealed that “no changes whatsoever” will be made to the current scheme until the end of July. However, he noted that from August to October the scheme will continue, for all sectors and regions of the UK, but with greater flexibility to support the transition back to work.

Employers currently using the scheme will be able to bring furloughed employees back part-time.

“There will be no reduction in the level of support for those on the scheme,” said the chancellor.

Instead he said he will ask employers to begin sharing the cost of paying people’s salaries with the government.

He added that further information on the changes will come at the end of the month.

Currently there are around 7.5 million people who have been placed on the scheme, which sees the government pay 80% of employees’ wages up to £2,500 a month, with the figure closing in on the 8.3 million that was predicted by the Office for Budget Responsibly.

The Bounce Back Loan Scheme (BBLS) is a new scheme designed to enable businesses to access finance more quickly during the coronavirus outbreak.

ABOUT THE SCHEME

The Bounce Back Loan Scheme (BBLS) provides financial support to businesses across the UK that are losing revenue, and seeing their cashflow disrupted, as a result of the COVID-19 outbreak and that can benefit from £50,000 or less in finance.

The scheme is a part of a wider package of government support for UK businesses and employees.

HOW IT WORKS

BBLS is available through a range of British Business Bank accredited lenders and partners, listed on the British Business Bank website.
A lender can provide a six-year term loan from £2,000 up to 25% of a business’ turnover. The maximum loan amount is £50,000.

The scheme gives the lender a full (100%) government-backed guarantee against the outstanding balance of the facility (both capital and interest).

The borrower always remains fully liable for the debt.

KEY FEATURES OF THE SCHEME

Finance of up to £50,000

Loans range from £2,000 up to 25% of a business’ turnover. The maximum loan amount is £50,000.

Guarantee to the lender to encourage them to lend

The scheme provides the lender with a full (100%), government-backed guarantee against the outstanding balance of the finance (both capital and interest).

The borrower remains 100% liable for the debt.

Government pays interest and fees for 12 months

The Government will make a Business Interruption Payment (BIP) to cover the first 12 months of interest payments.

The borrower does not have to make any repayments for the first 12 months.

Finance terms

The length of the loan is six years but early repayment is allowed, without early repayment fees.

Security

Lenders are not permitted to take personal guarantees or take recovery action over a borrower’s personal assets (such as their main home or personal vehicle).

No guarantee fees for businesses or lenders

There is no fee to access the scheme for either businesses or lenders.

Thousands more employees will able to receive support through the Coronavirus Job Retention Scheme (CJRS) after the eligibility date was extended to 19 March 2020, the government announced last evening.

· eligibility cut-off date for Coronavirus Job Retention Scheme extended to 19 March 2020

· the change will mean thousands more workers can be furloughed

· scheme expected to be fully operational next week

Under the scheme announced by Chancellor Rishi Sunak last month, employers can claim a grant covering 80% of the wages for a furloughed employee, subject to a cap of £2,500 a month.

To qualify and to protect against fraudulent claims, individuals originally had to be employed on February 28 2020.

But following a review of the delivery system and to ensure the scheme helps as many people as possible, new guidance published today has confirmed the eligibility date has been extended to March 19 2020– the day before the scheme was announced.

Employers can claim for furloughed employees that were employed and on their PAYE payroll on or before 19 March 2020. This means that the employee must have been notified to HMRC through an RTI submission notifying payment in respect of that employee on or before 19 March 2020.

This change makes the scheme more generous while keeping the substantial fraud risks under control and is expected to benefit over 200,000 employees.

HMRC have been working at pace to delivering the scheme, which is due to be fully operational next week.

The CJRS is part of an unprecedented package of measures announced by the Chancellor to protect individuals and businesses.

This includes significant support for the self-employed and immediate steps to give businesses access to cash to pay its rent, salaries or suppliers.

HMRC has announced that the web portal for handling Coronavirus Job Retention Scheme claims will go live on 20 April 2020 and HMRC will be ready to make payments by Thursday 30 April.

It also said that its aim is to process payments within 4-6 working days of receiving the claim.

HMRC expect that most employers will submit claims within the first couple of days. The system will be open 24/7 and will allow users to ‘queue’ where volumes are high. They have tested the portal and are ‘confident’ it will cope with the volumes. It aims to publish new guidance to help organisations prepare their claim etc.

Under the scheme Government will cover 80% of the salaries of ‘furloughed’ workers, up to a total of £2,500 a month.

The kick-off date was revealed by HMRC Chief Executive Jim Harra who confirms the scheme will be ready this month:

“We are ready to launch on 20 April. This will be made public shortly, at which point we will be contacting businesses to advise them what they need to do.

We are expecting phone demand to be beyond our capacity to offer a normal service. Therefore, the service is designed to be self-serve with guidance in place.”

We have emailed you to advise on the latest guidance on the Coronavirus Job Retention Scheme & we committed to keeping you regularly updated.

There has been further updates & all the guidance has been refreshed. The main areas we would draw your attention to are:

· the more detailed information on scheme eligibility

· further information on how to calculate a claim

· clarification of what constitutes wages.

We would encourage you to please review the following information.

Firstly, the online service used to claim is not available yet. We expect it to be available by the end of April 2020.

To remind you, if you cannot maintain your current workforce because your operations have been severely affected by coronavirus (COVID-19), you can furlough employees and apply for a grant that covers 80% of their 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.

This is a temporary scheme in place for 3 months starting from 1 March 2020, but it may be extended if necessary and employers can use this scheme anytime during this period. It is designed to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy. However, all employers are eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus.

Who can claim

You must have:

· created and started a PAYE payroll scheme on or before 28 February 2020

· enrolled for PAYE online – this can take up to 10 days

· a UK bank account

Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.

Apprentices

Apprentices can be furloughed in the same way as other employees and they can continue to train whilst furloughed.

However, you must pay your Apprentices at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time they spend training. This means you must cover any shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage.

Individuals

Individuals can furlough employees such as nannies provided they pay them through PAYE and they were on their payroll on, or before, 28 February 2020.

Employees you can claim for

You can only claim for furloughed employees that were on your PAYE payroll on or before 28 February 2020.

Employees hired after 28 February 2020 cannot be furloughed and claimed for in accordance with this scheme.

Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts. Foreign nationals are eligible to be furloughed.

To be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation. This includes providing services or generating revenue. Employers are free to consider allocating any critical business tasks to staff that are not furloughed. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.

If you made employees redundant or they stopped working for you after 28 February
If you made employees redundant, or they stopped working for you on or after 28 February 2020, you can re-employ them, put them on furlough and claim for their wages through the scheme.

If your employees are working reduced hours
If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme.

If your employee is on unpaid leave
You can only claim for employees that started unpaid leave after 28 February 2020.

If your employee is self-isolating or on sick leave
If you’re employee is on sick leave or self-isolating, they’ll be able to get Statutory Sick Pay.

You cannot claim for employees while they’re getting Statutory Sick Pay, but they can be furloughed and claimed for once they are no longer receiving Statutory Sick Pay.

Shielding Employees

You can claim for furloughed employees who are shielding in line with public health guidance (or need to stay home with someone who is shielding) if they are unable to work from home and you would otherwise have to make them redundant.

Employees with caring responsibilities

Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed. For example, employees that need to look after children can be furloughed.

If your employee has more than one job

If your employee has more than one employer they can be furloughed for each job. Each job is separate, and the cap applies to each employer individually.

Employees can be furloughed in one job and receive a furloughed payment but continue working for another employer and receive their normal wages.

If your employee is on a fixed term contract

Employees on fixed term contracts can be furloughed. Their contracts can be renewed or extended during the furlough period without breaking the terms of the scheme. Where a fixed term employee’s contract ends because it is not extended or renewed you will no longer be able claim grant for them.

Eligible individuals who are not employees

As well as employees, the grant can be claimed for any of the following groups, if they are paid via PAYE:

· office holders (including company directors)

· salaried members of Limited Liability Partnerships (LLPs)

· agency workers (including those employed by umbrella companies)

· limb (b) workers

The guidance below sets out specific considerations for those individuals who are paid via PAYE, but who are not necessarily employees in employment law. Unless explicitly set out below, all other guidance is applicable to these cases, and should be followed.

Office Holders

Office holders can be furloughed and receive support through this scheme. The furlough, and any ongoing payment during furlough, will need to be agreed between the office holder and the party who operates PAYE on the income they receive for holding their office. Where the office holder is a company director or member of a Limited Liability Partnership (LLP), the furlough arrangements should be adopted formally as a decision of the company or LLP.

Company Directors

As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.

Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.

This also applies to salaried individuals who are directors of their own personal service company (PSC).

Salaried Members of Limited Liability Partnerships (LLPs)

Members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through this scheme.

The rights and duties of a member of an LLP are set out in an LLP agreement and in the absence of an agreement, default provisions in the LLP Act 2000, based upon company and partnership law. Such an agreement may include separate agreement between the LLP and an individual member setting out the terms applicable to that member’s relationship with the LLP.

To furlough a member, the terms of the LLP agreement (or any such agreement between the LLP and the member) may need to be varied by a formal decision of the LLP, for example to reflect the fact that the member will perform no work in the LLP for the period of furlough, and the effect of this on their remuneration from the LLP. For an LLP member who is treated as being employed by the LLP (in accordance with s863A of ITTOIA 2005), the reference salary for this scheme is the LLP member’s profit allocation, excluding any amounts which are determined by the LLP member’s performance, or the overall performance of the LLP.

Agency Workers (including those employed by umbrella companies)

Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.

Furlough should be agreed between the agency, as the deemed employer, and the worker, though it would be advised to discuss the need to furlough with any end clients involved. As with employees, agency workers should perform no work for, through or on behalf of the agency that has furloughed them while they are furloughed, including for the agency’s clients.

Where an agency supplies clients with workers who are employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.

Limb (b) Workers

Where Limb (b) Workers are paid through PAYE, they can be furloughed and receive support through this scheme.

Those who pay tax on their trading profits through Income Tax Self-Assessment, may instead be eligible for the Self-Employed Income Support Scheme (SEISS), announced by the Chancellor on 26 March 2020.

If your employee does volunteer work

A furloughed employee can take part in volunteer work, if it does not provide services to or generate revenue for, or on behalf of your organisation. Your organisation can agree to find furloughed employees new work or volunteering opportunities whilst on furlough if this is in line with public health guidance.

If your employee undertakes training

Furloughed employees can engage in training, as long as in undertaking the training the employee does not provide services to, or generate revenue for, or on behalf of their organisation. Furloughed employees should be encouraged to undertake training.

Where training is undertaken by furloughed employees, at the request of their employer, they are entitled to be paid at least their appropriate national minimum wage for this time. In most cases, the furlough payment of 80% of an employee’s regular wage, up to the value of £2,500, will provide sufficient monies to cover these training hours. However, where the time spent training attracts a minimum wage entitlement in excess of the furlough payment, employers will need to pay the additional wages.

If your employee is on maternity leave, adoption leave, paternity leave or shared parental leave

The normal rules for maternity and other forms of parental leave and pay apply.

You can claim through the scheme for enhanced (earnings related) contractual pay for employees who qualify for either:

· maternity pay

· adoption pay

· paternity pay

· shared parental pay

Agreeing to furlough employees

Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

To be eligible for the grant employers must confirm in writing to their employee confirming that they have been furloughed. A record of this communication must be kept for five years.

You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.

How much you can claim

You’ll need to claim for:

· 80% of your employees’ wages (even for employee’s on National Minimum Wage) – up to a maximum of £2,500. Do not claim for the worker’s previous salary.

· minimum automatic enrolment employer pension contributions on the subsidised wage

You can choose to top up your employee’s salary, but you do not have to. Employees must not work or provide any services for the business while furloughed, even if they receive a top-up salary.

Grants will be prorated if your employee is only furloughed for part of a pay period.

Claims should be started from the date that the employee finishes work and starts furlough, not when the decision is made, or when they written to confirming their furloughed status.

The way you work out your employees’ wages is different depending on what type of contract they’re on, and when they started work.

Full or part time employees on a salary

Claim for the 80% of the employee’s salary, as of 28 February 2020, before tax.

Employees whose pay varies

If the employee has been employed for 12 months or more, you can claim the highest of either the:

· same month’s earning from the previous year

· average monthly earnings for the 2019-2020 tax year

If the employee has been employed for less than 12 months, claim for 80% of their average monthly earnings since they started work.

If the employee only started in February 2020, work out a pro-rata for their earnings so far, and claim for 80%.

Employer National Insurance and Pension Contributions

You’ll still need to pay employer National Insurance and pension contributions on behalf of your furloughed employees, and you can claim for these too.

You cannot claim for:

· additional National Insurance or pension contributions you make because you chose to top up your employee’s salary

· any pension contributions you make that are above the mandatory employer contribution

Past Overtime, Fees, Commission, Bonuses and non-cash payments

You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.

Benefits in Kind and Salary Sacrifice Schemes

The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind. Similarly, benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in the reference salary. Where the employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.

Normally, an employee cannot switch freely out of a salary sacrifice scheme unless there is a life event. HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.

Apprenticeship Levy and Student Loans

Both the Apprenticeship Levy and Student Loans should continue to be paid as usual. Grants from the Job Retention Scheme do not cover these.

National Minimum Wage

Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW)/ Apprentices Minimum Wage (AMW) for the hours they are working or treated as working under minimum wage rules.

This means that furloughed workers who are not working can be paid the lower of 80% of their salary or £2,500 even if, based on their usual working hours, this would be below their appropriate minimum wage. However, time spent training is treated as working time for the purposes of the minimum wage calculations and must be paid at the appropriate minimum wage, taking into account the increase in minimum wage rates from 1 April 2020. As such, employers will need to ensure that the furlough payment provides sufficient monies to cover these training hours. Where the furlough payment is less than the appropriate minimum wage entitlement for the training hours, the employer will need to pay the additional wages to ensure at least the appropriate minimum wage is paid for 100% of the training time.

Where a furloughed worker is paid close to minimum wage levels and asked to complete training courses for a substantial majority of their usual working time employers are recommended to seek independent advice or contact Acas.

What you’ll need to make a claim

Employers should discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.

To claim, you will need:

· your ePAYE reference number

· the number of employees being furloughed

· the claim period (start and end date)

· amount claimed (per the minimum length of furloughing of 3 consecutive weeks)

· your bank account number and sort code

· your contact name

· your phone number

You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.

Claim

You should make your claim using the amounts in your payroll – either shortly before or during running payroll. Claims can be backdated until the 1 March where employees have already been furloughed.

If appropriate, worker’s wages should be reduced to 80% of their salary within your payroll before they are paid. This adjustment will not be made by HMRC.

Minimum furlough periods

Any employees you place on furlough must be furloughed for a minimum period of 3 consecutive weeks. When they return to work, they must be taken off furlough. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.

After you’ve claimed

HMRC will check your claim, and if you’re eligible, pay it to you by BACS to a UK bank account.

You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted.

When the government ends the scheme
When the government ends the scheme, you must make a decision, depending on your circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy).

HMRC will process all claims made before the scheme ends.

When your employees are on furlough

You cannot ask your employee to do any work that:

· makes money for your organisation

· provides services for your organisation

They can take part in volunteer work or training.

Employee taxes

Your employees will still pay the taxes they normally pay out of their wages.

This includes pension contributions (both employer contributions and automatic contributions from the employee), unless the employee has opted out or stopped saving into their pension.

Employee rights

Employees still have the same rights at work, including:

· Statutory Sick Pay

· maternity and other parental rights

· rights against unfair dismissal

· redundancy payments

Grants cannot be used to substitute redundancy payments. HMRC will continue to monitor businesses after the scheme has closed.

Working for a different employer

If contractually allowed, your employees are permitted to work for another employer whilst you have placed them on furlough.

For any employer that takes on a new employee, the new employer should ensure they complete the starter checklist form correctly. If the employee is furloughed from another employment, they should complete Statement C.

Tax Treatment of the Coronavirus Job Retention Grant

Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.

Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

Rishi Sunak says lenders must ‘do their part’ to aid small businesses during Covid-19 crisis.

The chancellor, Rishi Sunak, has banned banks from requesting personal guarantees for emergency loans to small businesses amid growing government concern that lenders have been slow in meeting demands for help.

With the rapid increase in the number of universal credit claims suggesting many small companies have already collapsed since the economy was locked down, Sunak combined a new package of support for business with a warning to banks that they had to move more quickly.

Sunak announced his £330bn coronavirus business interruption loan scheme (CBILS) – under which the government underwrites loans to companies – just over two weeks ago, but has now been forced to admit that support was not arriving quickly enough and was failing to reach all the companies that required it.

The chancellor said that under the revised plan:

· Lenders would be banned from requesting personal guarantees – which mean borrowers often have to put their homes on the line – on loans under £250,000.

· The loan scheme would be extended so that it covered all small companies affected by Covid-19 and not just those unable to get commercial funding.

· There would be a new scheme to bolster support for larger firms not currently eligible for loans, under which the government would provide a guarantee of 80% so that banks could make loans of up to £25m to firms with an annual turnover of between £45m and £500m.

The Treasury said the chancellor would be speaking to bank chief executives next week to discuss how the schemes are working and “ensure everybody is playing their part”.

Sunak, the Bank of England governor, Andrew Bailey, and the interim head of the Financial Conduct Authority, Christopher Woolard, told UK banking chiefs last month to take “all action necessary” to make sure government-backed loans were benefiting households and businesses as planned.

The chancellor said: “This is a national effort and we’ll continue to work with the financial services sector to ensure that the £330bn of government support, through loans and guarantees, reaches as many businesses in need as possible.”

While the government’s official line is that great progress is being made in providing much-needed support to businesses that have been badly affected by the closure of large chunks of the economy, the chancellor has listened to the employers’ bodies calling for the scheme to be more comprehensive, less bureaucratic and speedier.

Adam Marshall, director-general of the British Chambers of Commerce, said: “We’re pleased that the chancellor is listening and responding to the real-world concerns posed by firms across the UK who are urgently trying to access financial support.”

Mike Cherry, national chair of the Federation of Small Businesses, said: “The most immediate issue threatening the survival of millions of small businesses and the self-employed is severely depleted cash flow. Time is of the essence and therefore we welcome government action in ensuring that any viable small business that has been negatively impacted by the coronavirus can now directly access CBILS rather first being offered a bank’s own standard commercial lending product.

“Removing personal guarantees for all commercial loans below £250k is also very welcome. Taking on debt at the current time is a daunting prospect for many small businesses and the self-employed.”

Sunak said that since the CBILS had been announced £90m of business interruption loans had been approved for nearly 1,000 firms and £1.9bn corporate finance provided to firms hit by Covid-19.

“We are making great progress on getting much-needed support out to businesses to help manage their cashflows during this difficult time – with millions of pounds of loans and finance being provided to hundreds of firms across the country,” the chancellor said.

“And now I am taking further action by extending our generous loan scheme so even more businesses can benefit. We have also listened to the concerns of some larger businesses affected by Covid-19 and are announcing new support so they can benefit too.”

Gerard Lyons, senior fellow at the Policy Exchange thinktank and a policy adviser to Boris Johnson when he was London’s mayor, said: “In a fast-moving environment it should be no surprise that policy has to continue to evolve. Speed, scale and simplicity are of the utmost importance to follow through on the measures to date. In particular banks either must engage 100% in the process or be bypassed with the government giving grants to firms to ensure they survive.”

Self-employed workers have been hit particularly hard by the coronavirus (COVID-19) outbreak. Not only do they face losing income because of the lockdown but they also have additional ongoing fixed-cost expenses such as vehicles or premises.

The good news is that the chancellor has announced the self-employed and those who run a business as a partnership are to receive a similar although not identical 80% of earnings, compared to those who are employed.

There are caveats, however, as we explain below. The scheme is called the Self-Employment Income Support Scheme (SEISS).

Coronavirus Self-Employment Income Support Scheme:

Am I eligible?

If you are actively self-employed in the UK (or a member of a partnership) and are affected by the coronavirus outbreak, you might be able to claim a grant of 80% of your trading profits.

Your trading profit is the taxable profit that is calculated as part of your income tax return, from either self-employment or as part of a partnership.

You aren’t eligible for the grant if the 2018-19 trading profit is equal to or greater than £50,000, and the average profits for previous years starting in 2016-17 are equal to or greater than £50,000.

The average is determined by adding the trading profits for the three years, then dividing by three. If you’ve only been trading for two years, the government will add those two years and divide by two instead.

More than half of your income must come from your self-employment for you to be eligible. In other words, you can’t claim if more than half your income come comes from another source, such as full-time employment.

Similarly, if more than 50% of your income comes from other sources usually included on your Self-Assessment tax return, such as investment or rental income, then you are not eligible.

How much do I get?

The grant is capped at £2,500 per month and lasts only three months – although this might be extended by the chancellor if required, as with many of the coronavirus measures.

To work out how much you get, the government will calculate the average of your trading profit across the years you traded during the 2016/17, 2017/18 and 2018/19 tax years (that is, they add up your trading profits then divide by the number of years you traded in).

The government will then give you a grant of 80% of that amount. This will be paid into your account in a lump sum.

The grant will be taxed, just like your regular income. In other words, the income must be declared along with other income sources in your 2020/21 Self-Assessment tax return. You will then pay any tax due as you would usually.

If you claim tax credits, the grant will need to be listed in your tax credit claim as income.

Who isn’t eligible?

You are not eligible for the SEISS grant if any of the following applies:

· Your trading profits are equal to or more than £50,000 – for both tax year 2018/19 and when averaged across the tax years you traded in during last three full tax years starting in 2016/17.

· You aren’t self-employed or in a partnership at the moment, or don’t intend to be in the future. It’s not enough to merely be enrolled for Self-Assessment and to have undertaken self-employment work or have a role in a partnership at some point in the past year. You must be trading now and intend to do so in the 2020/21 tax year too.

· You failed to submit a Self-Assessment tax return for the 2018/19 tax year before 23 April 2020.

· You haven’t lost trading profits due to the coronavirus outbreak.

· Less than 50% of your income comes from your self-employment or partnership.

How do I apply for the scheme?

The government will contact you and invite you to apply online, using the details they have via your Self-Assessment registration.

Unlike some of the other coronavirus-related grants, receiving this money is not automatic. If you don’t apply, after being contacted by HMRC, you will not receive it.

Applications will only be taken online via the gov.uk website. The government asks that you don’t contact HMRC to enquire about the grant because it’s busy supporting with other queries.

When will I receive the grant?

The chancellor says the Self-Employment Income Support Scheme will be “up and running” by June 2020, therefore this is likely to be the earliest point that the grant will be paid to you.

What is it?

A loan scheme that has been set up to help small and medium-sized enterprises (SMEs) that are struggling with cash flow because of revenues that have been deferred or lost due to the coronavirus outbreak. The loans are being offered on generous terms to support SMEs.

Who is eligible?

Any UK-based business that has a turnover less than £45m is eligible for the Coronavirus Business Interruption Loan Scheme.

What it covers

The Coronavirus Business Interruption Loan Scheme allows SMEs to access a loan between £1,000 and £5m.

The loan scheme covers several business financing services, including term loans, overdrafts, asset finance and invoice finance.​

Finance terms are up to six years for loans and asset finance facilities. For overdrafts and invoice finance facilities, terms are up to three years.

The loans are offered through a number of finance providers and are backed by a government guarantee that covers up to 80% of the balance. This will enable lenders to turn “no” financing decisions into more “yes” decisions​.

Interest and fees for the loans will be paid by the government for the first 12 months.

How your business can access it

The Coronavirus Business Interruption Loan Scheme is available now and is operated by more than 40 accredited lenders, including high street banks that offer services to SMEs. Your first step should be to speak to your current banking provider.

To access the funding, you need to confirm that your turnover is less than £45m. You also have to provide a borrowing proposal that would be considered viable by the lender if the coronavirus disruption was taken out of the equation.

In addition, you need to demonstrate that the provision of finance will allow your business to trade out of any short to medium term difficulty.

It’s worth remembering that the borrower always remains 100% liable for the debt.

HOLIDAYS

Regulations have taken effect which amend the Working Time Regulations 1998 to relax the current restriction on carrying forward untaken annual leave. What’s been amended and why?

Under the Working Time Regulations 1998 (WTR), workers have a statutory right to 5.6 weeks’ paid annual leave. The WTR require that at least four of these weeks must be taken in the holiday year in which they accrue, as they prevent them being carried forward into the next holiday year (although case law has carved out exceptions here relating to long-term sick leave and maternity leave). The additional 1.6 weeks can be carried over by agreement in writing, e.g. in the employment contract, as can any further contractual annual leave.

The Working Time (Coronavirus) (Amendment) Regulations 2020 came into force on 26 March 2020. They have now amended the WTR to insert an exception to this bar on carrying forward untaken annual leave. They provide that where, at the end of the holiday year, it was “not reasonably practicable” for the worker to take some or all of their leave as a result of the effects of coronavirus (including the effects on the worker, the employer, or the wider economy or society), they can now carry forward that annual leave and take it in the following two holiday years. This new rule applies to the four weeks of annual leave. It does not apply to the additional 1.6 weeks but, as stated above, those weeks can already be carried forward one holiday year by agreement.

The aim of this measure is to ensure that key industries are not left short-staffed in the battle against coronavirus.

The WTR also include a provision governing payment in lieu of any untaken annual leave where a worker’s employment terminates. This has now been amended to provide that where a worker’s employment subsequently terminates and, on their termination date, they remain entitled to this coronavirus-related carried-forward annual leave, you must make a payment in lieu to them for the period of that untaken leave. This ensures the worker doesn’t lose out if they still haven’t taken the carried-forward annual leave by the time their employment ends.

Finally, there is a new restriction on your current statutory right to turn down a worker’s request for annual leave. In future, you will only be able to require a worker not to take this carried-forward annual leave on particular days where you have “good reason” to do so.

So that key industries aren’t being left short-staffed during the coronavirus pandemic by workers having to take their unused annual leave entitlement before their holiday year ends, the government has amended the legislation to provide that workers can now carry forward up to four weeks of their unused statutory annual leave where it wasn’t reasonably practicable for them to take it as a result of the effects of coronavirus.

This article has been reproduced by kind permission of Indicator – FL Memo Ltd. For details of their tax-saving products please visit www.indicator-flm.co.uk or call 01233 653500.

The government has confirmed that the self-employed will receive financial support if their business has been affected by coronavirus. Are your clients eligible and how can you help them?

Who can get the grant?

Self-employed individuals or members of a partnership are eligible for a grant representing up to 80% of their average profits if they meet the following criteria:

• • • they submitted a tax return for 2018/19
    • their business traded during 2019/20
    • their business is continuing to trade, or would be except for coronavirus
    • they intend to continue trading in 2020/21
    • they have lost trading/partnership trading profits due to coronavirus
    • their trading profits are less than £50,000 and represents more than half of their taxable income.

How is the £50,000 threshold applied?

First, you should check the trading profits declared on your client’s 2018/19 tax return. If the amount is less than £50,000 and it makes up more than half of their taxable income, then this condition is met. If not, you should check whether their average profits for tax years 2016/17 to 2018/19 is less than £50,000 and accounts for more than half of their average taxable income during this time. If it does, then they meet this requirement.

How much will they be paid?

Individuals will get a taxable grant which will be 80% of the average profits from the tax years 2016/17 to 2018/19. If they became self-employed during those years, HMRC will use the average for the years they submitted tax returns for. The maximum amount is £2,500 per month for three months, so to get the full amount your client would need to have average profits of £37,500 per annum.

How do you apply?

HMRC will contact your client if they are eligible for the scheme and invite them to apply online using GOV.UK. In the meantime, your clients are likely to need help checking whether they are eligible for this scheme and calculating the amount they should receive.

This article has been reproduced by kind permission of Indicator – FL Memo Ltd. For details of their tax-saving products please visit www.indicator-flm.co.uk or call 01233 653500.

The Chancellor, last evening, announced a new Self-employment Income Support Scheme to support self-employed people who have been adversely affected by COVID-19.

Self-employed people do not need to get in touch with HMRC as the scheme isn’t yet open for applications. HMRC will contact eligible customers by the beginning of June, inviting them to apply.

Unfortunately, we are aware of an increase in scam emails, calls and texts. If someone gets in touch claiming to be from HMRC, saying that financial help can be claimed or that a tax refund is owed, and asks you to click on a link or to give information such as your name, credit card or bank details, please do not respond.

HMRC will never contact you out of the blue to ask for these details.

The government has also introduced the following help for the self-employed:

· Deferral of Self Assessment Income Tax payments due in July 2020 and VAT payments due from 20 March 2020 until 3‌0‌‌ June 2020

· Grants for businesses that pay little or no business rates

· Increased amounts of Universal Credit

· Business Interruption Loan Scheme

· Directors of their own company paid through PAYE, may be able to get support using the Job Retention Scheme.

We will continue to share the most up to date information directly with you as it becomes available.

We received last night the first guidance from GOV.UK on how the scheme is to work & here it is:

The Coronavirus Job Retention Scheme is a temporary scheme open to all UK employers for at least three months starting from 1 March 2020. We expect the scheme to be up and running by the end of April. It is designed to support employers whose operations have been severely affected by coronavirus (COVID-19).

Employers can use a portal to 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.

Who can claim

Any UK organisation with employees can apply, including:

· businesses

· charities

· recruitment agencies (agency workers paid through PAYE)

· public authorities

You must have created and started a PAYE payroll scheme on or before 28 February 2020 and have a UK bank account.

Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme.

Employees you can claim for

Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including:

· full-time employees

· part-time employees

· employees on agency contracts

· employees on flexible or zero-hour contracts

The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.

To be eligible for the subsidy, when on furlough, an employee can not undertake work for or on behalf of the organisation. This includes providing services or generating revenue. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.

This scheme is only for employees on agency contracts who are not working.

If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.

Employers should discuss with their staff and make any changes to the employment contract by agreement. When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication.

Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme.

You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.

If your employee is on unpaid leave

Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.

If your employee is on Statutory Sick Pay

Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this.

Employees who are shielding in line with public health guidance can be placed on furlough.

If your employee has more than one job

If your employee has more than one employer they can be furloughed for each job. Each job is separate, and the cap applies to each employer individually.

If your employee does volunteer work or training

A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of your organisation.

However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

If your employee is on Maternity Leave, contractual adoption pay, paternity pay or shared parental pay

Individuals who are on or plan to take Maternity Leave must take at least 2 weeks off work (4 weeks if they work in a factory or workshop) immediately following the birth of their baby. This is a health and safety requirement. In practice, most women start their Maternity Leave before they give birth.

If your employee is eligible for Statutory Maternity Pay (SMP) or Maternity Allowance, the normal rules apply, and they are entitled to claim up to 39 weeks of statutory pay or allowance.

Employees who qualify for SMP, will still be eligible for 90% of their average weekly earnings in the first 6 weeks, followed by 33 weeks of pay paid at 90% of their average weekly earnings or the statutory flat rate (whichever is lower). The statutory flat rate is currently £148.68 a week, rising to £151.20 a week from April 2020.

If you offer enhanced (earnings related) contractual pay to women on Maternity Leave, this is included as wage costs that you can claim through the scheme.

The same principles apply where your employee qualifies for contractual adoption, paternity or shared parental pay.

Work out what you can claim

Employers need to make a claim for wage costs through this scheme.

You will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage. Fees, commission and bonuses should not be included.

At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.

We will issue more guidance on how employers should calculate their claims for Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions, before the scheme becomes live.

Full time and part time employees

For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.

Employees whose pay varies

If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:

· the same month’s earning from the previous year

· average monthly earnings from the 2019-20 tax year

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.

Once you’ve worked out how much of an employee’s salary you can claim for, you must then work out the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.

Employer National Insurance and Pension Contributions

All employers remain liable for associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on behalf of their furloughed employees.

You can claim a grant from HMRC to cover wages for a furloughed employee, equal to the lower of 80% of an employee’s regular salary or £2,500 per month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on paying those wages.

You can choose to provide top-up salary in addition to the grant. Employer National Insurance Contributions and automatic enrolment contribution on any additional top-up salary will not be funded through this scheme. Nor will any voluntary automatic enrolment contributions above the minimum mandatory employer contribution of 3% of income above the lower limit of qualifying earnings (which is £512 per month until 5th April and will be £520 per month from 6th April 2020 onwards).

National Living Wage/National Minimum Wage

Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working.

Therefore, furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.

However, if workers are required to for example, complete online training courses whilst they are furloughed, then they must be paid at least the NLW/NMW for the time spent training, even if this is more than the 80% of their wage that will be subsidised.

What you’ll need to make a claim

Employers should discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.

To claim, you will need:

· your PAYE reference number

· the number of employees being furloughed

· the claim period (start and end date)

· amount claimed (per the minimum length of furloughing of 3 weeks)

· your bank account number and sort code

· your contact name

· your phone number

You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of your claim.

Claim

You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until the 1 March if applicable.

What to do after you’ve claimed

Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account.

You should make your claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll.

You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted. You can choose to top up the employee’s salary, but you do not have to.

When the government ends the scheme

When the government ends the scheme, you must make a decision, depending on your circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy).

Employees that have been furloughed

Employees that have been furloughed have the same rights as they did previously. That includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.

Once the scheme has been closed by the government, HMRC will continue to process remaining claims before terminating the scheme.

Income tax and Employee National Insurance

Wages of furloughed employees will be subject to Income Tax and National Insurance as usual. Employees will also pay automatic enrolment contributions on qualifying earnings, unless they have chosen to opt-out or to cease saving into a workplace pension scheme.

Employers will be liable to pay Employer National Insurance contributions on wages paid, as well as automatic enrolment contributions on qualifying earnings unless an employee has opted out or has ceased saving into a workplace pension scheme.

Tax Treatment of the Coronavirus Job Retention Grant

Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.

Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

The Chancellor last evening outlined the Self-employment Income Support Scheme. Use this scheme if you’re self-employed or a member of a partnership and have lost income due to coronavirus.

Who can apply

You can apply if you’re a self-employed individual or a member of a partnership and you:

· have submitted your Income Tax Self Assessment tax return for the tax year 2018-19

· traded in the tax year 2019-20

· are trading when you apply, or would be except for COVID-19

· intend to continue to trade in the tax year 2020-21

· have lost trading/partnership trading profits due to COVID-19

Your self-employed trading profits must also be less than £50,000 and more than half of your income come from self-employment. This is determined by at least one of the following conditions being true:

· having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income

· having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.

If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, you must do this by 23 April 2020.

How much you’ll get

You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):

· 2016 to 2017

· 2017 to 2018

· 2018 to 2019

To work out the average HMRC will add together the total trading profit for the 3 tax years (where applicable) then divide by 3 (where applicable) and use this to calculate a monthly amount.

It will be up to a maximum of £2,500 per month for 3 months.

We’ll pay the grant directly into your bank account, in one instalment.

How to apply

You cannot apply for this scheme yet.

HMRC will contact you if you are eligible for the scheme and invite you to apply online.

Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.

Watch out for potential scams

You will access this scheme only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.

After you’ve applied

Once HMRC has received your claim and you are eligible for the grant, we will contact you to tell you how much you will get and the payment details.

If you claim tax credits you’ll need to include the grant in your claim as income.

Other help you can get

The government is also providing the following additional help for the self-employed:

· deferral of Self Assessment income tax payments due in July 2020 and VAT payments due from 20 March 2020 until 30 June 2020

· grants for businesses that pay little or no business rates

· increased amounts of Universal Credit

· Business Interruption Loan Scheme

If you’re a director of your own company and paid through PAYE you may be able to get support using the Job Retention Scheme.

For Income Tax Self-Assessment, payments due on the 31 July 2020 may be deferred until 31 January 2021.

Eligibility

You are eligible if you are due to pay your second self-assessment payment on account on 31 July. 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.

How to access the scheme

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

HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of COVID-19 and have outstanding tax liabilities.

The Chancellor of the Exchequer, Rishi Sunak, has already announced a wide-ranging package of measures to mitigate the impact of the Covid-19 pandemic on employees, but government support for self-employed workers has been less forthcoming.

However, the House of Commons Public Bill Committee has now sought to include protection for the self-employed under an amendment to the Coronavirus Bill currently before Parliament (which we expect to be passed swiftly). It proposes that freelancers and self-employed workers should receive guaranteed earnings of:

80% of their monthly net earnings, averaged over the last 3 years; or

£2,917 per month.

whichever is the lower.

If accepted, which is expected, this amendment will bring support for self-employed people in line with the support offered by the Covid-19 Job Retention Scheme available to employers.

This may well be subject to tweaks and amendments as it goes through the legislative process and will come as welcome news to the self-employed.

This proposal is in addition to the following measures which were previously announced to support self-employed workers:

· The next self-assessment income tax payment due on 31 July 2020 will be deferred until 31 January 2021; and

· The next quarter of VAT payments (20 March 2020 to 30 June 2020) will also be deferred automatically and taxpayers will be given until the end of the 2020/21 tax year to pay any liabilities. VAT refunds and reclaims will continue to be paid by HMRC as normal. HMRC advise that if you normally pay your VAT by direct debit you should cancel this directly with your bank.

If you are self-employed and cannot work because you contract Coronavirus, the proposal is that you will be able to make a claim for the ‘new style’ Employment and Support Allowance (payable from the first of sickness, rather than day eight) or Universal Credit more easily due to changes the government has introduced.

If you are already receiving Universal Credit, then the Minimum Income Floor will be temporarily relaxed to ensure that self-employed Universal Credit claimants will receive support.

We will update our guidance for self-employed workers following a further announcement by the government, expected to be this evening.

We have received the following latest guidance from our regulatory body (ICEAW) for the Coronavirus Job Retention Scheme/The Furlough Scheme, which is as follows from ICEAW:-

The following is our understanding of this policy and how this will work based on the information published so far. It should not be relied on for advice at this stage but is intended to give an indication of how the scheme will work.

Key policy objectives of the scheme

Overall objective is to keep people at home while enabling employers to retain staff who will be needed when they begin to rebuild their businesses in the future. This will enable work to begin again with a critical core who have the necessary knowledge.

Rules as outlined in official statements released at 23 March 2020

1. Furloughed members of staff must not work for the employer during the period of furlough.

2. Furlough is from 1 March 2020, so is to be backdated. It will last for at least 3 months and will be extended if necessary. Note that while the scheme is backdated to the beginning of March as it is intended to support all those employed then, a firm will only be eligible to claim the grant once they have agreed the furlough with their staff and staff have stopped working for the employer. This will of course be subject to employment law in the usual way.

3. It is available to employees on the payroll at 29 February 2020.

4. All UK businesses are eligible, ‘any employer on the country, small or large, charitable or non-profit’ to use the Chancellor’s words.

5. The scheme pays a grant (not a loan) to the employer.

6. The grant will be paid to the employer through a new online system which is being built for this purpose.

7. The employer will pay the employee through payroll, using the Real Time Information (RTI) system as usual, as required by the employment contract. This contract may be renegotiated but that is a matter for employment law. So RTI system reporting of payroll will continue as normal.

8. Scheme will be administered by HMRC

• Relevant employees must be designated as furloughed employees

• Employers will submit information to HMRC through a new online portal

• As this will take time to build, businesses should look to the Coronavirus Business Interruption Loan Scheme to support cash flow in the meantime. The narrative used in the information released so far says ‘if your employer cannot cover staff costs due to COVID-19 they may be able to access support…’. This is a conditional phrase which may relate to existing funds available to the employer. We do not yet know how these might be determined, nor whether there is a bar of some description.

9. Maximum grant will be calculated per employee and is the lower of

• 80% of ‘wages’. The notes published so far, use the phrase ‘wage for all employment costs up to a cap of £2,500 per month’. It is our understanding that this includes employers’ NIC and pension contributions. Wages will be determined by reference to a defined period (yet to be announced)

• £2,500 per month

Illustration

X Ltd employs Mr A at an annual salary of £24,000, so £2,000 per month. Mr A has opted out of auto enrolment.

Each month, Mr A currently receives net pay of £1,665 which is after deducting PAYE of £191 and employees NIC of £144. On this salary, the employer pays employers’ NIC of £174.

The available grant for the employer is the lower of

a) 80% of (£2,000 + £174), and

b) £2,500

So, a grant of £1,739.

The cash required by X Ltd to furlough based on maintaining the existing salary is £435 per month. It is a matter for employment law whether the employer is required to pay this top up. Discussions with employees may have agreed that the employee has agreed to a different arrangement during their furlough.

Notes to illustration based on an extended understanding of how the scheme will work.

1. If Mr A had not opted out of auto enrolment, X Ltd would also be making pension contributions on his behalf. If so, the available grant is based on 80% of (gross salary + Employers’ NIC + employers pension contributions paid), subject to the monthly cap of £2,500.

2. We understand that the rules for the scheme are being designed with underlying reference to employment law. If the individual is still under contract, Mr A can expect to receive his salary in full. The £1,739 grant paid to X Ltd should not be taken as the new maximum cost of employment to the employer unless the contract has been redrafted.

3. Subject to the employment contract and any amendment, the salary which the employer actually pays the employee during the furlough period may be different to the pay paid used as the reference period and upon which the grant figure is based.

Pubco – a scenario

In the following illustration, the business has already closed as instructed by the government. We have had a number of enquiries along similar lines and are seeking clarification of our understanding of the rules apply.

Mr & Mrs Fuller are the tenants of a pub. They have a substantial wet and food trade as the pub is in a coastal location and does good trade over the Summer. The pub is open all year round.

Mr & Mrs Fuller operate the pub through a limited company (Pubco). They take salaries of £8,600 each and withdraw profits of £30,000 each in the form of dividends. They live above the pub and work long hours being in the pub every day.

Pubco employs three permanent staff supplemented by extra seasonal staff in the Summer months and at Christmas.

The pub closed on 20 March as instructed by the Prime Minister, and following the Chancellor’s announcement on 20 March, Pubco has furloughed its staff other than Mr & Mrs Fuller who are still living above the pub and dealing with the company administration. The contracts of employment of the other staff have been varied to permit furloughing and the three permanent staff members have agreed to accept a pay reduction to 80% of the previous level. The seasonal staff for this year have not yet been hired.

Our understanding is that Pubco will be eligible to receive the government grant support under the Coronavirus Job Retention Scheme for the monthly wages of the 3 permanent staff members. No grant support is available to support the living costs of Mr & Mrs Fuller.

Mr & Mrs Fuller will need to look for alternative support while the pub remains closed.

CORONAVIRUS-19 JOB RETENTION SCHEME: ICAEW TAX FACULTY further details

Introduction

https://www.businesssupport.gov.uk/coronavirus-job-retention-scheme/ says “Under the coronavirus Job Retention Scheme, all UK employers with a PAYE scheme will be able to access support to continue paying part of their employees’ salary for those that would otherwise have been laid off during this crisis. This applies to employees who have been asked to stop working, but who are being kept on the pay roll, otherwise described as ‘furloughed workers’. HMRC will reimburse 80% of their wages, up to £2,500 per month. This is to safeguard workers from being made redundant. The Coronavirus Job Retention Scheme will cover the cost of wages backdated to March 1st and is initially open for 3 months but will be extended if necessary.”.

The ICAEW Covid-19 hub is at https://www.icaew.com/insights/coronavirus. The tax section is at https://www.icaew.com/insights/coronavirus/uk-practical-business-advice-covid-19.

The following paragraphs describe our understanding of the scheme and are our proposed guidance for member.

Which businesses are eligible?

1. Eligible businesses include charities and not-for-profit organisations and will include single director companies, although the same rules will apply as to other businesses. The grant applies to all UK based businesses.

Owner/managed companies

2. Many owner managed company director/shareholders pay small salaries and the balance of income as dividends. The scheme does not extend to dividends. Only the salary is relevant to the scheme.

How is payment going to work in practice?

3. We understand that the employer will pay the contractually agreed amounts as required by the employment contract in the usual way. This will involve paying the employee, and HMRC the PAYE and both primary and secondary National Insurance Contributions. The grant will be paid directly to the employer. We do not know how this will operate for employers which use a payroll agency.

4. Employers will claim the grant through a new separate portal to be built by HMRC.

What is the £2,500 maximum grant based on?

5. The £2,500 monthly grant covers all employment costs, i.e., salary, employer pension contributions required by auto enrolment (if applicable), and employer NIC.

6. The earnings period to be used to determine the maximum grant has yet to be clarified. For new employees in particular, options will be needed and also for seasonal staff. However, clearly there will need to be a base line and options being considered are likely to include,

a) Average for a prior period such as 12 months to 1 March or perhaps the month of February alone for a new employee

b) For seasonal workers, it might be possible to use the same period last year, such as 3 months March, April, May 2019.

c) For those working irregular hours or say, on reduced pay (e.g.’ maternity or sick leave) a different previous period may be needed.

Will entitlement to other employment benefits continue during the period of furlough?

7. The rules for the grant will not displace the existing employment contract. So, for example, we would expect the entitlement to holiday and sick pay would depend on the contract.

Employees eligible

8. Eligible employees are those on the payroll on 1 March 2020. It has yet to be clarified whether or not those re-employed under a new contract will qualify, although the policy intent would seem to support this would be reasonable.

9. We have had many questions asking if workers can be moved in and out of being furloughed if work becomes available to an employer and then ceases again? This has yet to be clarified, but we consider it very likely that they will. The scheme is being designed to allow for flexibility so that furloughed staff can be brought back to work to replace those still working who later become sick. We anticipate that this will be seen as difficult to regulate an anticipate that a minimum period of furlough leave may be built in as a requirement before the person van return to work. So, we anticipate that the rules will specifically make provision for

a) Sickness cover where a continuing employee is now off sick, and a furloughed worker can provide cover

b) Where employees agree to share shifts to enable more of them to continue to be paid.

This will again depend on the employment contracts of those affected.

10. The matter of which employees an employer decides to furlough will be a matter for negotiation with staff and employment law.

11. The impact on job sharing employees and the decision to furlough will be a matter for negotiation with staff and employment law.

12. We presume that, subject to anything different stated in the employment contract, eligible employees would also include apprentices and agency workers.

13. We do not yet know whether the scheme will include deemed employees under the off payroll working rules.

14. An employee does not have to accept furlough if offered, but the employer could then make the employee redundant instead using the usual employment law procedure.

15. We understand that staff can study while they are being furloughed.

16. It is a condition of the scheme that the employee must do no work at all during the furlough period. The intention of the scheme is to allow employers to pay staff who are without work. HMRC will of course have visibility of pay records.

Employees with more than one employment

17. While we understand that an employee who is furloughed can do no work at all, our current understanding is that the employee can hold a separate employment with a different and unconnected employer which will be unaffected.

The Coronavirus Jobs Retention Scheme – “Furloughing” of employees – New update

Due to the lack of information being provided on this matter by government whilst they finalise the small print, opinion is changing on how the system will work. It appears that the recognised bodies from our research believe the position will be as follows.

What we currently know

(Please note that Government advice is being updated daily!)

You need to classify employees as a furloughed worker. This would mean that they are kept on your payroll, rather than being laid off.

To qualify the employee should not undertake ANY work for you whilst furloughed, including being required to answer calls, emails etc. In exchange Employers can claim a grant of up to 80% of each employee’s wage for ALL employment costs, up to a cap of £2,500 per month.

The employee remains employed while furloughed and you can choose to fund the difference between this payment and their ‘normal’ salary, but you do not have to.

Assuming that notice has not yet been served on “at risk” employees (and even if it has), employers should discuss the JRS with them as part of the consultation process and agree to either carry on with the redundancy process (recognising the risks associated with this) or agree to use the JRS as an alternative.

Should the business decide, at a later point, that redundancies are still necessary, they should take legal advice at that stage on the associated risks.

We do not know whether employees will be restricted from taking on other/new work whilst receiving a salary under the Scheme.

It is likely that the CJRS will not interrupt an employees’ continuity of service. Likewise, annual leave will continue to accrue whilst staff remain employed.

The grant is a reimbursement by HMRC of salary costs paid to furloughed workers, so employers may face cash flow issues in paying these workers.

Please let us know if you need financial support for this as there are a number of options that may be open to you, including the Government’s Coronavirus Business Interruption Loan.

Features we expect from the CJRS

It is thought that furloughed employees will be deemed to be taking a leave of absence. On that basis, they would strictly be unpaid and so the Government need to consider how the grant is structured so that it is not ‘pay’ and therefore no PAYE tax/NIC is due and no benefits that are driven from pay.

It is normal practice in countries such as the US that already have the status of furloughed worker for benefits like health and life cover to continue whilst an employee is furloughed.

However, in the common view the CJRS should be implemented in such a way that these do not impact on the flow of the 80% from the Government via the employer to the employees.

There could be further complications to this, for example where the employee pays for additional private medical cover as part of an employee benefits scheme. We also await details on how the CJRS will apply to employees within personal service companies (PSCs). We anticipate that PSCs will be eligible in the same way as other employers and subject to the same (expected) rules on the reference salary for the 80% calculation etc.

How do we track the employees and costs?

From our research, the response to the likely questions:

• • • Set up the payroll with a furloughed pay element to identify the amounts for reclaim
    • Calculate furloughed pay based on the 12 weeks up to the end of February. Use the regular basic pay but not overtime or bonuses etc. We have heard that Steve Barclay (Chief Secretary to the Treasury) mentioned February and this could be the link to anti-forestalling measures
    • For employees off sick during that 12 weeks, base furloughed pay on the amounts excluding sick pay
    • Assume this is still pay and that PAYE tax and NIC deductions will be due, albeit that the payments to HMRC are likely to be deferred
    • This is a grant that reimburses the business, so cash flow could still be an issue and support for your business may still be needed from a bank facility or CBILS loan requirements to fund these payments prior to reimbursement.

Eligibility and accessing the CJRS

All UK businesses are eligible.

Employers or their agent will need to:

• • • Designate affected employees as ‘furloughed workers,’
    • Notify those employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
    • Submit information to HMRC about the employees that have been furloughed and their earnings. This will be through a new online portal (HMRC will set out further details on the information required)

Next steps

• • 1. Identify those employees ‘at risk’ and earmarked for lay-off
    2. Analyse pay from the last 12 weeks up to the end of February. *Note – this is our estimate of the likely period for assessment. Details still to be confirmed by the Government.
    3. Establish base pay that qualifies for 80% furloughed grant
    4. Identify employee’s where £2,500 cap will apply
    5. Calculate additional pay required to get to 80% of ‘normal’ pay
    6. Model options to manage any top up outside of the grant
    7. Implement changes to payroll and pay elements etc.
    8. Prepare application to HMRC
    9. Register and log-on to new HMRC Portal
    10. Submit required information to HMRC
    11. Receive reimbursement via new system

Also please note the following:

When are employees entitled to SSP?

• • • If an employee is displaying symptoms, then s/he should stay home and will be eligible for SSP; this will be for the whole 14 days and not from the 4th day onwards as is usually the case for SSP
    • If an employee is in a vulnerable group, has returned from high risk country or been in contact with a confirmed case or person displaying symptoms), s/he should stay home or be sent home and will also be entitled to SSP (as per the Government guidance)
    • If an employee is in the same household as someone who is displaying symptoms, s/he should stay home for 14 days and will be entitled to SSP (as per the Government guidance)
    • If an employee chooses to self-isolate and does not fall into any of the above categories, the employer does not have to pay him / her as this is a decision that the employee is making
    • If an employee is not displaying symptoms and is not in any of the other categories but is told to go home or not come in e.g. because the whole business is shutting temporarily, s/he is entitled to full pay unless the employer has a short time working / lay off clause in their contracts as this is a business decision that the employer is making

Note: smaller employers (defined as fewer than 250 employees) will be able to reclaim 14 days’ SSP per employee in either of these scenarios; existing payroll mechanisms are not set up to do this but the Government has said that systems will be put in place.

What happens if we have to close the business?

If the employer shuts the business and tell staff not to come into work then as they are ready and available for work and it is the employer that is not providing work for them, the employer would have to continue to pay them full pay unless there is a Shortage of Work / Lay Off clause in their contracts and the employees have signed their contracts.

Employers are also permitted to require employees to take any paid holiday entitlement they have; notice of twice the length of the period of holiday they are being required them to take must be given.

The overall message, however, is that the Government will provide assistance to both employers and employees. They are urging businesses not to make permanent redundancies.

The Prime Minister announced what has become known as ‘lockdown’. Here’s what we know so far on what support is available to business, and crucially, where we need more detail.

Things we know:

Coronavirus Business Interruption Loan Scheme

The temporary Coronavirus Business Interruption Loan Scheme will support 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 (there are 40 registered ranging from high street banks to niche lenders), backed by the government-owned British Business Bank.

The facility will only be available if you cannot get traditional/mainstream funding.

Talking to banks, your current bank is the best bet, with banks unlikely to deal with applications for non-customers.

You will need to have everything you would need for a formal bank application like a cash flow forecast of how you can afford to pay back the loan.

If you are considering the above, please talk to us and we can help you with the process. This is a loan and will of course give your business access to funding but is also debt needing repayment. We also expect it to only be accessible for ‘normal’ purposes and not simply for the provision of cash flow support through the current situation, although this needs clarification.

Time to Pay arrangements

HMRC has set up a dedicated line to help support businesses who are unable to meet their payments as they fall due.

Always be on the front foot with HMRC and be up front with what is needed.

The number is 0800 0159 559. We have already supported a number of clients already and we are seeing HMRC be agreeable to most reasonable requests.

VAT

No VAT payments for business between 20 March 2020 until 30 June 2020. Payments will be deferred and need to be paid by 31 March/ 5 April 2021 instead.

No specific action needed here – file your return as normal but if you cannot pay the VAT, then you simply do not do so. If you normally pay by direct debit we advise you to cancel this and reinstate it at a later date.

Statutory Sick Pay (employing less than 250 people)

The ability to pay the employee Statutory Sick Pay from day 1 for Covid-19 issues, with two weeks refunded from HMRC.

Business Rates

Business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.

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 £15,000 and under will receive a grant of £10,000. Businesses in these sectors with a property that has a rateable value of between £15,000 and £51,000 will receive a grant of £25,000.

Dealt with via your local authority. If you are not in the above category, still call your authority to see what they can offer. We have seen many businesses outside the criteria above be able to defer their rates bill for at least three months.

Self Employed (not directors of limited companies)

For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.

No action needed – this is automatic.

Things we are desperate need for more detail on;

Coronavirus Job Retention scheme

The Government paying 80% of wages for furloughed employees. We have no detail on what this measure will look like and any details. We understand this is perhaps the single most important measure to business and understanding what it is, how it works and who it can apply to are still unknown. We do know it will be dated from 1 March and the first repayment to employers will be before 30 April, but other than that, details are to follow!

Before you take any action on this, seek HR Advice! This is so easily overlooked but an employee tribunal could be way more expensive!

Self Employed

There is no detail on how self-employed individuals will be supported at this moment. We know groups are lobbying hard for this.

Do not forget..

Traditional things in times of business difficulty.

Can you claim any tax credits for Research and Development? Consider completing those projects early.

Build relationships with customers and suppliers. People will remember how you act during the tough times.

Have a working cash flow model so you can plan your resources – please talk to us, we can help you set up and monitor a rolling cashflow model.

Keep safe & keep positive

Details are now coming through, but they are still sketchy to say the least.

British Business Bank has been updated with some more information about the Coronavirus Business Interruption Loan Scheme (CBILS). We have been speaking to our banking contacts and here’s what you need to know so far:

• • • Your first point of call should be to call your own bank, if you don’t have a direct contact, we may be able to help
    • The banks are likely to support their own clients and not take on new clients at the moment
    • Businesses will need the following:
      • 2 sets of financial statements (full, not abbreviated)
      • Current Management Information
      • Forecast (2 scenarios may be needed, as the business was operating and as it will now operate and recover)
    • The banks will still want to see a ‘purpose’ for the lending
    • As we have said before; if the business was struggling before with losses/ poor performance – the banks will struggle to lend now
    • The banks will still want to lend responsibly
    • The ‘challenger banks’ are keen to help and might be the best option for construction businesses

Remember, we here to help, contact us about financial modelling, approaching banks and the next steps for your business.

The current coronavirus pandemic appears to be accelerating and is undermining many businesses’ key trading assumptions. We have looked to summarise the practical steps businesses should be looking to take to mitigate the issues.

Key performance indicators

Monitor key performance indicators, notably daily sales, cash collection etc to identify any rapidly deteriorating situations. This will ensure you are accurately informed of the impact on your business and allow you to review the available options to counter any issues.

Cash management

Many businesses will never have been presented with a set of events in which day to day cash management is required. In the current environment preparing a daily receipts and payments cashflow combined with a medium-term integrated forecast is a sensible step. It will allow you to manage cash to mitigate any issues and ensure no short-term funding issues.

Business operations

Review and critically appraise your customers and supply chain. Identify who may be most at risk, the potential impact on your business through stress testing, and how you could lessen the shock.

Stress test

Stress test your forecasts for a variety of worst-case scenarios, identify what tools you have to manage cashflow and the key timelines. In a worst case, work out the timelines and cash impact of potentially trading out.

Stakeholder engagement

The Government has clearly stated it will take all steps to address the issues to businesses of coronavirus. They have put in place several practical steps to ensure UK banks and HMRC are supportive in the current environment. It is important all stakeholders are engaged with appropriately so that businesses avail themselves of the available resources and reliefs.

The Chancellor has set 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.

Support for businesses through the Coronavirus Job Retention Scheme

Under the 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.

Eligibility

All UK businesses are eligible.

How to access the scheme

You will need to:

• • • designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation
    • submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)

HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers.

Further details will be issued this week.

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

Support for businesses through deferring VAT and Income Tax payments

We will support businesses by deferring Valued Added Tax (VAT) payments for 3 months. If you’re self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.

VAT

For VAT, the deferral will apply from 20 March 2020 until 30 June 2020.

Eligibility

All UK businesses are eligible.

How to access the scheme

This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal.

Businesses taking advantage of this deferral should cancel their VAT direct debit immediately.

Income Tax

For Income Tax Self-Assessment, payments due on the 31 July 2020 will be deferred until the 31 January 2021.

Eligibility

If you are self-employed you are eligible.

How to access the scheme

This is an automatic offer with no applications required.

No penalties or interest for late payment will be charged in the deferral period.

HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of Covid-19 and have outstanding tax liabilities.

Support for businesses who are paying sick pay to employees

We will bring forward legislation 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 online and 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

Eligibility

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

How to access the scheme

A rebate scheme is being developed. Further details will be provided in due course once the legalisation has passed.

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

Business rates holiday for retail, hospitality and leisure businesses.

We will introduce a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.

Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.

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 hereditaments 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 & boarding premises and self-catering accommodation

How to access the scheme

There is no action for you. This will apply to your next council tax bill in April 2020. However, local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.

You can estimate the business rate charge you will no longer have to pay this year using the business rates calculator.

Further guidance for local authorities is available in the expanded retail discount guidance.

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.

For businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000.

For businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive 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 and/or leisure sector

Properties that will benefit from the relief will be occupied hereditaments 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.

Guidance for local authorities on the scheme will be provided shortly.

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

Find your local authority.

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 (SBBR), 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 small business and already receive SBBR and/or RRR
    • you are a business that occupies property

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.

Guidance for local authorities on the scheme will be provided shortly.

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

Find your local authority.

Support for businesses through the Coronavirus Business Interruption Loan Scheme

A new temporary Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will launch early next week to support primarily small and medium-sized businesses to access bank lending and overdrafts.

The government will provide lenders with a guarantee of 80% on each loan (subject to a per-lender cap on claims) to give lenders further confidence in continuing to provide finance to SMEs. The government will not charge businesses or banks for this guarantee, and the Scheme will support loans of up to £5 million in value.

Eligibility

You are eligible for the scheme if:

• • • your business is UK based, with turnover of no more than £45 million per year
    • your business meets the other British Business Bank eligibility criteria

How to access the scheme

The full rules of the Scheme and the list of accredited lenders is available on the British Business Bank website. All the major banks will offer the Scheme once it has launched. There are 40 accredited providers in all.

You should talk to your bank or finance provider (not the British Business Bank) as soon as possible and discuss your business plan with them. This will help your finance provider to act quickly once the Scheme has launched. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.

The scheme will be available from early next week commencing 23 March.

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 0159 559.

If you’re worried about a future payment, please call us nearer the time.

Insurance

Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim as long as all other terms and conditions are met.

Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

The government has announced the Coronavirus Job Retention Scheme which will enable all UK employers, regardless of their size, to be able to access support to continue paying part of their employees’ and workers’ salaries for those who would otherwise have been laid off, made redundant or had their contracts terminated during the coronavirus pandemic. How do you access the scheme?

The finer details of the Coronavirus Job Retention Scheme, which is intended to avoid redundancies and protect jobs, have yet to be published as this is still very early days, but what we know so far is that you will need to:

• • • • • • • • • designate affected workers who are temporarily not working during the coronavirus pandemic as “furloughed workers” and then notify your staff of this change. Note that placing employees on “furlough leave” requires an express term in their employment contracts which would permit this or you will otherwise need individual employees’ express consent to this change of status (preferably obtained in writing by letter or email), but in the current climate employees are highly likely to agree
                • submit information to HMRC about the workers that have been furloughed and their earnings through a new online portal that is being set up – HMRC will set out further details on the information required shortly.

Furloughed workers must carry out no work for their employer. HMRC will then reimburse 80% of furloughed workers’ wage costs provided they remain on payroll, up to a cap of £2,500 per worker per month. This is a grant, not a loan. HMRC is working urgently to set up a system for reimbursement.

The scheme will cover the cost of wages backdated to 1 March 2020 and will be open initially for at least three months – but the government will extend the scheme for longer if necessary. Payments should be available from the end of April 2020 at the latest.

Other key points are:

• • • • • • • • • it will cover workers who have already been laid off, made redundant or had their contracts terminated because of the coronavirus, but it’s likely you will need to re-engage them first
                • there’s no requirement for your business to be closed to access the scheme, so you should be able to furlough some workers and not others
                • furloughed workers aren’t entitled to receive a top-up of their wages from you. It’s up to you whether you wish to top up their wages further, e.g. from 80% to 100%
                • employees and workers remain employed/engaged during the furlough period.

The chancellor is set to announce an employment and wage subsidy package to try to protect millions of jobs.

Talks went on into the night with business groups and union leaders, who urged the government to help pay wages amid the coronavirus pandemic. Many firms are warning of collapse, wiping out thousands of jobs, as life in the UK is largely put on hold. It is the latest in a string of big fiscal attempts to ease the burden on businesses and their employees.

Prime Minister Boris Johnson signalled Chancellor Rishi Sunak would be saying more on Friday about the extended package the government is putting forward for workers. The PM has urged struggling businesses to “stick by their employees, because we’re all going to need them”.

One proposal under discussion is for the UK to follow the lead of countries such as Denmark, where the government has promised to cover 75% of salaries at private companies for three months, if they promise not to let staff go.

The technical difficulty is how to operate such a scheme. It could be through the tax system, or as a series of guarantees to businesses, or informally after a significant tax holiday. Former Business Secretary Greg Clark suggested in the Commons on Thursday it could work by using refunds on the Pay As You Earn tax scheme operated by all employers.

Business Loans

These are early days and banks are only just receiving instruction on how the government backed loans will be accessed.

Statutory Sick Pay

ACAS have released advice for employers and employees on their website to deal with many of the questions now being asked about Coronavirus. Please follow the link below for more information:

https://www.acas.org.uk/coronavirus

There is also some very helpful information available on the universal credit website. This applies if your employees are not entitled to statutory sick pay or you are self employed and unable to work due to the Coronavirus. For more information please follow the link below:

Coronavirus and claiming benefits

Tax Liabilities

A helpline has been set up for businesses and self employed individuals to contact HMRC to arrange a bespoke Time to Pay arrangement for their tax affairs. The number is 0800 0159 559.

Grants

We have spoken to Durham County Council and they have advised that businesses currently in receipt of Small Business Rates Relief or Rural Rate Relief will be contacted about the grants of up to £10,000. Businesses they have identified as being in the retail, hospitality and leisure sectors with a rateable value between £15,000 and £51,000 will also be contacted about the grants of up to £25,000. There will also be an application for businesses that they have not identified. The funding is expected to be available from early April.

As yet the Council do not have any further information about the grants but are expecting to have everything in place for the beginning of next week (23 March 2020) to start contacting businesses they have identified as being eligable. We will keep in contact with the council and advise you of any further updates as and when we have them.

IR35

Chief Secretary to the Treasury, Steve Barclay, has announced that the IR35 tax reforms will be pushed back by one year, less than a week after the controversial measures were confirmed in the Budget.
Barclay confirmed that the changes, which will clamp down on tax avoidance by targeting contractors for companies who are, in practice, providing the same service as employees, would not go ahead in April as previously expected.

Instead, the measures will come into effect on 6 April 2021. Barclay said that move is part of a broad package of measures the Treasury has announced to protect the economy from the coronavirus outbreak.

He confirmed that the decisions were “a deferral, not a cancellation, and the government remains committed to reintroducing this policy”. We have also seen copies of emails issued by HMRC yesterday which confirm that HMRC continue to view the introduction of IR35 as key to addressing a perceived mismatch between the tax paid by contractors compared to employees.

We recommend that, as far as possible, businesses continue to plan for the introduction as these rules are still coming however the government is rightly recognising that business has enough to deal with in the current environment. In our opinion, this is the right move rather than increasing pressure on an already strained economy.

Business Support

The government have launched a business support website and helpline to assist advice and financial help. For more information please follow the link below:

https://www.gov.uk/business-support-helpline

The helpline number is 0300 456 3565.

Business Loans

Any business can access a government backed loan on attractive terms. The government will cover up to 80% of any losses with no fees. The first 6 months of the finance will be interest free as the government will cover the first 6 months of interest payments.

Statutory Sick Pay

Businesses with fewer than 250 employees can reclaim 14 days of sick pay per employee. Anyone not eligible to receive sick pay, including those earning less than an average of £118 per week, some of those working in the gig economy, or self-employed people, is able to claim Universal Credit and or contributory Employment and Support Allowance.

Self Employed Tax Liabilities

A helpline has been set up for self employed individuals to contact HMRC to arrange a bespoke Time to Pay arrangement for their tax affairs. The number is 0800 0159 559.

Business Rates

There is a business rates holiday for retail, hospitality and leisure business in England for the 2020 to 2021 tax year.

Grants

A grant of up to £25,000 will be provided to retail, hospitality and leisure business operating from smaller premises, with a rateable value between £15,000 and £51,000. For businesses in receipt of small business rate relief they will be entitled to grants of up to £10,000. To check your rateable value please follow the link below:

https://www.gov.uk/correct-your-business-rates

Insurance

Businesses that have cover for both pandemics and government-ordered closure should be covered, as the government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres etc is sufficient to make a claim. Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers. Most businesses are unlikely to be covered, as standard business interruption insurance policies are dependent on damage to property and will exclude pandemics.

Mortgages, Loans and Credit Cards

Temporary credit limit increases, payment holidays on credit cards, loans and mortgages and fees waived on missed payments are some of the support measures being rolled out. However, what exactly is available will depend on your personal circumstances as all customers’ situations will be assessed on a case-by-case basis.