It has been a rollercoaster of a few
weeks with some unprecedented times. It is a new worry that we’ve had to face,
and we’ve had to face this together. The Coronavirus has not only brought the
whole country to a standstill, but has slowed down the whole world.
However, together we must have high
spirits, and come out of this stronger. We hope everyone reading this is safe
and our thoughts are with those directly affected by the virus. We all must
adhere to what the government are saying and stay home. Travel only if
necessary as this will delay any spread and get us out of this sooner.
The government has pledged support
for employees, and have now put together something for the self-employed. It
may not be what we all wanted, however, we have to give credit to the
government for the level of support they are showing.
Coronavirus Job Retention Scheme
Q: I have heard the government will contribute towards
The Chancellor has put together an emergency temporary package to allow employers to keep on their staff. The Coronavirus Job Retention Scheme is open to all UK employers for at least three months starting from 1st March 2020. The scheme is expected to be up and running by the end of April 2020. It is designed to support employers whose day to day trade have been severely affected.
Employers can claim for 80% of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month, plus the associated Employer NI contributions and minimum automatic enrolment employer pension contributions on that wage. Employers can use this scheme anytime during this period and is open to all UK employers that had created and started a PAYE payroll scheme on 28 February 2020.
Your furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including full-time, part-time, employees on agency contracts and 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 this, when on furlough, your employee can not undertake work for or on behalf of you. This includes providing services or generating revenue. While on furlough, the employee’s wage will be subject to usual income tax and other deductions. If your member of staff 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.
As an employer you will have to write to your employees 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. 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. Deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.
An employer can also choose to top up an employee’s salary beyond the 80% but is not obliged to under this scheme. 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 1st March if applicable and you will have to work out how much you can claim for,
- Salaried Staff: 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.
- Varied Staff: If the employee has been employed 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
monthly earnings from the 2019-20 tax year
However, 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, you will need to 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.
Coronavirus Business Interruption Loan (CBIL)
Q: It’s great that the government will help with wages once
it is due to be out by the end of April 2020, but how can business get help
During this interrupting time, there
is bound to be a dip in cashflow, so how can businesses get an injection of
cash when all trade has halted? Well the government has introduced a temporary
Coronavirus Business Interruption Loan Scheme which supports SMEs with
access to loans, overdrafts, invoice finance and asset finance of up to £5
million and for up to 6 years.
The government will also make a
Business Interruption Payment to cover the first 12 months of interest payments
and any lender-levied fees, so smaller businesses will benefit from no upfront
costs and lower initial repayments.
The government will provide lenders with
a guarantee of 80% on each loan to give lenders further confidence in
continuing to provide finance to SMEs. This is great for businesses with
low credit rating. The scheme will be delivered through commercial lenders,
backed by the government-owned British Business Bank.
To be eligible your business must
tick the following;
UK-based in its business activity
- Have an annual turnover of no more than £45 million
- Have a borrowing proposal which the lender:
consider viable, were it not for the COVID-19 pandemic
- Believes will enable you to trade out of any short-term to medium-term difficulty
To apply, you should talk to your bank or bank manager or one of the 40 accredited finance providers as soon as possible, to discuss your business plan. You can find out the latest on the best ways to contact them via their websites or click here https://bit.ly/CrossAccCBIL
Self-Employment Income Support Scheme
Will the self-employed be looked after by the government?
Great credit must be given to the
government as a lot of pressure is on them during this unprecedented time. They
have taken strides that no government has in history. The chancellor has left
the self-employed questioning whether there would be any support. However, the
chancellor has announced that there will be a scheme in place to allow you to
claim a taxable grant worth 80% of your trading profits up to a maximum of
£2,500 per month for the next 3 months. This may be extended if needed.
can apply if you’re a self-employed individual or a member of a partnership and
submitted your Income Tax Self Assessment tax return for the tax year 2018-19
in the tax year 2019-20
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 2016-2019, 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. HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the 23 April 2020 deadline in the usual way.
So to summarise, the grant will be 80% of average trading profits from the year 2016-17, 2017-18 and 2018-19 and will be up to a maximum of £2,500 per month for 3 months. The grant will be paid directly into your bank account, in one instalment.
You cannot apply for this scheme yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online. Again, this is looking to be all set up by the end of April 2020.
Hospitality, Retail and Leisure Business Grants
Q: I am in the Hospitality, Retail or Leisure sector, I have
heard there is extra support since we’ve been effected the most, as we cannot
work from home etc...
Restaurants, Cafes, Pubs and Bars
have probably been hit the hardest as social distancing gets serious. The
Government has forced these businesses to close earlier than any other
businesses. However, there is support in the form of business rates relief. Retail,
leisure and hospitality businesses with a rateable value of £500,000 or less
will get one year business rates relief in the financial year 2020 to 2021. This
means that you will not have to pay any business rates during this time. This
will be applied through the business rates system. You do not need to do
anything. Your local authority will contact you.
The Welsh Government is helping in
the form of two grants.
A grant of £25,000 is being made available for retail, leisure and hospitality businesses occupying properties with a rateable value of between £12,001 and £51,000. This means businesses that occupy properties such as shops, restaurants, cafes, drinking establishments, cinemas, live music venues and hotels.
Also, a £10,000 grant to all businesses eligible for small business rates relief (SBRR) in Wales with a rateable value of £12,000 or less. Again, you do not need to do anything as the local authority will contact you. More information is due to be released as this is only the pilot stage.
There is lots of information available on the Gov website; however, the main details are still being worked on. The government have laid the foundation for its intent on supporting businesses during these incredibly difficult times.
We are still available on the phone and on email as we continue to support our clients. If there is anything you need help understanding or want a chat please feel free to get in touch. These are incredibly tough times and we wish everyone the best of health and hope to come out of this stronger.