Please see a few updates following our email sent on Monday 23rd March.
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. HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. A furloughed worker is someone that is not working and will require reporting. HMRC are working urgently to set up a system for reimbursement and as soon as the system is announced we will be in touch, however we have received some more information today as follows:
Rules as outlined in official statements released at 23 March 2020
- Furloughed members of staff must not work for the employer during the period of furlough.
- 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.
- It is available to employees on the payroll at 29 February 2020.
- All UK businesses are eligible, ‘any employer on the country, small or large, charitable or non-profit’ to use the Chancellor’s words.
- The scheme pays a grant (not a loan) to the employer.
- The grant will be paid to the employer through a new online system which is being built for this purpose.
- 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.
- 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.
- 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.
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
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.
Statutory Sick Pay 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 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
No business will have to pay over VAT from now to June, and they’ll have until the end of the financial year to repay those bills. That should help companies struggling with a cash flow crisis albeit the requirement to submit a return still appears to be a requirement. HMRC have updated their guidance for those who pay by Direct Debit. Customers who normally pay by direct debit should cancel their direct debit with their bank if they are unable to pay. Please do so in sufficient time so that HMRC do not attempt to automatically collect on receipt of your VAT return. We must reiterate this is only a deferment.
Businesses that pay little or no business rates because of small business rate relief (SBBR), rural rate relief (RRR) and tapered relief, may be eligible for a one-off grant of £10,000 to help meet their ongoing business costs.
If you are eligible, your local authority will write to you. You do not need to do anything to apply. No change to the guidance.
Support for retail, hospitality and leisure businesses that pay business rates
A business rates holiday has been introduced for the 2020 – 2021 tax year.
Eligible businesses are those who have properties mainly used:
- As shops, restaurant, cafes, drinking establishments, cinemas and live music venues
- For assembly and leisure
- As hotels, guest and boarding premises and self-catering accommodation
If you are eligible, you do not need to do anything. This will be applied to your next council tax bill in April 2020 No change to the 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.
Businesses in these sectors with a rateable value of under £15,000, they will receive a grant of £10,000
Businesses in these sectors with a rateable value of between £15,001 and £51,000, they will receive a grant of £25,000
You do not need to do anything; your local authority will write to you if you are eligible for this grant. No change to the guidance.
Business loan scheme
The government is also extending its coronavirus business interruption loan scheme, to be interest free for 12 months. More guidance has been issued albeit not all banks are in the scheme. There are requirements to evidence the impact on your business through cashflows for the loan along with additional criteria. Please contact us if you need help with this.
Deferring self-assessment deadline for taxes
The deadline for self-assessment of taxes will be extended to January 2021, meaning that self-employed people will have longer to pay their taxes. You will not be required to make your July 2020 payment now until January 2021. This remains in place but reiterate this is only a deferment.
Support for the self employed
There has been a lot of speculation regarding a scheme to help the self-employed based on 80% of the average income of the last 3 years Tax returns submitted. Nothing as yet has been announced but please be assured as soon as it is we will be in touch.
If you run a business or are self-employed and are concerned about paying your tax due to coronavirus, you can call HMRC’s helpline for help and advice: 0800 0159 559.
I hope the above gives you a better understanding of the measures the government are taking to try and cover concerns for employers, employees and individuals at this difficult time.