The latest news and information on how Small Businesses can access help financial help and support. This is updated at the end of each day. This page also contains useful links, Our Guides and Frequently Asked Questions
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It cannot be denied that the Government have got a lot right in this pandemic and the support for businesses has been good; not great because there have been huge gaps, but good nevertheless and has helped many businesses survive.
This support was extended in the spring budget and therefore this summary is a roundup of what’s available now for you and your business.
The Coronavirus Job Retention Scheme (CJRS AKA Furlough)
This allows you to put individual employees (including yourself if you are a Director) on Furlough and claim 80% of their wages up to a cap of £2,500. You have to pay for their Employer National Insurance and Pension contributions but not anything for the hours they don’t work.
This scheme has now been extended until September 2021 but has been modified so that from July, you will have to contribute for the hours not worked – this means that you will pay 10% from July and 20% from August of their gross pay for their hours not worked.
These changes are designed to wean the nation off of this support as we come out of lockdown and the nation goes back to work.
The Self-Employed Income Support Scheme (SEISS)
This grant scheme is for the self-employed who cannot claim Furlough and who have seen a downturn in their income.
Unlike the Furlough scheme, which is calculated by employers, the SEISS Grant is calculated by HMRC and is accessed via your government gateway.
The good news is that over 600,000 non eligible, self-employed people have now been brought into the scheme because 2019/20 tax returns have been used to assess the income. This scheme has also been extended until September 2021.
The grant is calculated as 80% of your average trading profits capped at £7,500.
To access the scheme, visit your government gateway: https://www.gov.uk/log-in-register-hmrc-online-services
If you haven’t claimed yet and think you may be eligible contact us asap.
Restart Grants for businesses in Retail, Hospitality and Leisure
Grants are available of up to £6,000 for non-essential retail and up to £18,000 for leisure sector businesses that have been forced to remain closed throughout the pandemic.
There is little detail on how these grants are to be paid at the moment, but they are likely to be paid out by local authorities.
Local Restrictions Support Grant
In addition to the above, businesses that have had forced closure or who have been severely impacted by the pandemic may be eligible for a one-off grant of up to £9,000 which is calculated by the rateable value of your business premises.
These grants are available from your local council’s support page. Here is a link for Maidstone: https://maidstone.gov.uk/home/other-services/covid-19/tier-2-primary-areas/advice-and-help-for-businesses
And here is a link to Medway https://www.medway.gov.uk/businesssupportgrants
Recovery Loan Scheme (RLS)
The RLS is a loan that will be available from 6th April 2021 and will provide a Government backed guarantee of 80%. Amounts of between £25,000 and £10m will be available and will be very similar to the CBILS loan scheme.
Banks and Finance lenders will be doing due diligence on the borrowers and will likely require a personal guarantee on the 20% part of the loan.
There isn’t much detail of this loan scheme at the moment, other than it is open until December and that it is intended to replace the CBILS scheme that closes at the end of March 2021.
CBILS and BBL (Loan Schemes)
The CBILS and BBL Loan schemes close on 31st March, so if you want to take advantage you better be quick!
CBILS is an 80% backed loan up to £5m and BBL is 100% Government backed up to £50K.
Both can be accessed via your bank or alternative lending providers.
Business Rate Holiday Extension
An extension to the business rate holiday for retail, hospitality and leisure sectors until June 2021 has been announced with reduced rates until March 2022.
This scheme has been implemented by the local authority who will apply the discount automatically.
After listening carefully to the Budget today, we can report on the headline announcements and how they affect you as a business owner. As usual, the detailed nuances will become apparent over the coming days, but this newsletter contains the highlights.
This was always going to be a balancing act for Rishi, as we are still in the grips of a pandemic and he cannot increase taxes without risking the economy’s recovery as we come out of it.
So, the emphasis was always going to be on further support, and he has not failed to deliver. However, it’s a budget in two halves – the carrot and the stick if you like.
So, the carrot first…
Business support
Additional Grants
The Chancellor announced £5bn in Government Restart Grants to businesses in retail, hospitality, accommodation, leisure, and personal care. Grants of up to £18,000 each for 700,000 firms, will be made available to prevent mass bankruptcies during the latest lockdown.
Rates Relief
An extension in the temporary 100% tax cut for hospitality, retail and leisure until the end of June 2021. After this a 2/3 reduction will be applied.
Hospitality sector VAT
The temporary reduction from 20% to 5% is to be extended until 30th September and then a reduced rate of 12.5% will apply until April 2022.
Stamp Duty
An extended stamp duty holiday until the 30th June and then an increased NIL rate band, up to £250,000 from £125,000, until 30th September.
Support for workers
Furlough – this will be extended until the end of September to support the economic recovery from Covid-19.
Employees will continue to receive 80% of their wages until the scheme ends, but firms will be asked to contribute 10% in July and 20% in August and September as the scheme is gradually phased out.
Furlough has kept 100,000’s of people in work over the course of the pandemic and to take it away would put these jobs at risk. This way we are weaned off the support and the Chancellor hopes to avoid a cliff edge.
Unfortunately, many people have already been made redundant so the extension will have come along too late for them.
Self-employed Grants of up to £7,500 will be available from next month for three months, including an expansion in the scheme to allow those who started working for themselves in the 2019-20 financial year to make claims, and a 5th and final grant in July.
This is a welcome extension of the self-employed scheme as many of the newly self-employed, who were excluded in the previous rounds, will be brought in.
To recognise that the scheme may be being used by people who have not seen a downturn in their business, the 5th grant in July will be reduced to 30% of average months if turnover has dropped by less than 30%. If turnover has dropped by more than 30%, increased support remains available.
Apprentice Schemes
Employers taking on apprenticeships will receive £3,000 to encourage this – a doubling of this support.
Loan Schemes
A new Recovery Loan Scheme – business can apply for the loan from £25k and up to £10m with a government guarantee of 80%.
A government mortgage guarantee for home buyers who can only afford a 5% deposit.
Super Deduction
Businesses can reduce their Corporation Tax by 130% of the cost of investment. So, for example if you invest £100,000 in equipment you would normally receive a tax reduction of £19,000. Under the new scheme you would receive tax relief on £130,000 an additional £5,700 in tax relief.
Now the stick….
Corporation Tax
This has already been widely reported, but Corporation Tax is on the rise. It will increase to 25% from April 2023.
Small businesses have some relief in that Corporation Tax will not change for companies with profits below £50K, and there will be a tapered increase for companies with profit between £50K and £250K.
In addition, companies will be able to carry back losses up to 3 years instead of just 1 year. This gives companies a choice to receive a tax refund at 19% or roll forward losses to potentially receive a reduction of 25%.
Income Tax
The Chancellor is unable to increase the headline rates of income tax but by increasing the personal allowance and tax bands at less than the rate of inflation, he can raise income tax without anyone noticing and this is the option taken here.
Capital Gains Tax
Capital Gains was largely left alone however the Capital Gains annual exemption was frozen.
Conclusion
This is not a balanced Budget; it commits the government to spending a whole lot more, but this is arguably exactly what is needed in these times. It does attempt to lay the foundations for paying back the public debt we have incurred over the last two years.
Many feared much harsher tax rises in this Budget, but the reality is it is too soon.
The biggest losers today are the large companies with a 25% corporation tax rate, but this was offset somewhat by the super deduction to encourage investment.
Another announcement – the changes seem to be coming thick and fast over the last few weeks, and just as we familiarise ourselves with one scheme, more changes are made.
This, however, will give some security to businesses that are forced to close, and those that historically struggle over the winter/post-Christmas months – more furlough!
That’s right – the Job Retention Scheme (furlough) has been extended until the end of March 2021. This will continue to be on a flexible basis, at 80% of gross pay, with no obligation to top up, however Employers will be liable for the National Insurance and pension contributions. It is, quite simply, the August rules which have been brought back in.
Employee eligibility – Neither the employer nor the employee needs to have previously claimed or have been claimed for under CJRS to make a claim under the extended CJRS (if other eligibility criteria are met). An employer can claim for employees who were employed and on their PAYE payroll on 30 October 2020. The employer must have made a PAYE Real Time Information (RTI) submission to HMRC between 20 March 2020 and 30 October 2020, notifying a payment of earnings for that employee.
Employees that are re-employed: Employees that were employed and on the payroll on 23 September 2020 (the day before the Job Support Scheme announcement) who were made redundant or stopped working afterwards can be re-employed and claimed for. The employer must have made an RTI submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees.
This does mean bad news for anyone hoping for their Job Retention Bonus for keeping furloughed employees on their payroll. This may not reappear at any time though, as the word from the Chancellor was that ‘the government will redeploy a retention incentive at the appropriate time.’ We wait to see what that may be, if anything at all.
Self-Employed Income Support Scheme (SEISS) – This has been increased from the originally announced 55% from November – January, and is now 80% of the average trading profits once again, up to £7,500. Any additional grant for February – April will be reviewed and an appropriate percentage set nearer the time.
Loan Schemes – The CBILs and Bounceback Loan Schemes have been extended to new entrants until 31 January 2021, and Bounceback loans, for those not taking the full £50k will now have the opportunity to be ‘topped up’.
In addition to this, mortgage holidays will continue to be available for up to 6 months, payment holidays for consumer credit products continue to be available, as does the 5% VAT reduction until 31 March 2021.
Let’s hope for no more changes now, so we can settle and get used to these new rules. As always we will continue to support you and submit your furlough claims.
The Final Furlough? – More changes to the scheme
I remember a time when there was a budget once a year and we all braced ourselves for change and scurried around to interpret the Chancellor’s speech and communicate that to clients. This is happening daily now!
Just as you thought the furlough scheme was dead or dying, it is revived to cover the new national lockdown starting on the 5th November.
I will try to go through this, but it could get confusing. The old furlough was replaced with the new furlough but that has now been paused and the old furlough extended. Phew.
In a nutshell the old furlough is where employers could claim 80% of an employee’s gross wages up to a maximum of £2,500. Employers must still pay Employers National Insurance and pension contributions.
Unlike the old furlough, where employees could not work, now employers have the flexibility to bring workers back on a part-time basis.
The extended furlough will be paid upfront to cover wages and will be extended until December.
To be eligible to be claimed for under this extension, employees must be on an employer’s PAYE payroll by 23:59 30th October 2020. This means a Real Time Information (RTI) submission notifying payment for that employee to HMRC must have been made on or before 30th October 2020.
Business Grants
Businesses required to close in England due to local or national restrictions will be eligible for the following:
- For properties with a rateable value of £15k or under, grants to be £1,334 per month, or £667 per two weeks;
- For properties with a rateable value of between £15k-£51k grants to be £2,000 per month, or £1,000 per two weeks;
- For properties with a rateable value of £51k or over grants to be £3,000 per month, or £1,500 per two weeks.
There are no details on how these grants can be claimed – more details to follow.
In light of recent tiered lockdown restrictions being imposed, the government support has been generously amended by Chancellor Rishi Sunak to offer more support.
Overall today’s announcement provided more support for employers and the self-employed. You will be forgiven for being confused by the sheer number of changes being made. Rest assured we are looking at this very carefully and will take account of all of these changes.
The key changes were as follows:
Job Support Scheme (for open businesses)
Key changes here include:
- Government support for hours not worked has increased from 33% to 61.67%
- They are also increasing the cap on Government support from £697.92 to £1,541.75
- Hours that an employee needs to work as a minimum has reduced to 20% of their usual working hours instead of 33%
- This is specifically for businesses who have seen their demand affected by COVID, but remain able to operate safely
- Employers contribution for non-worked hours is now 5% not 33%, and capped at £125 per month
Some additional points to note:
- Using this does not affect the eligibility for the Job Retention Bonus
- Employees or employers DO NOT have to have previously used the Job Retention Scheme
- This will be means-tested in the instance of large employers (more than 250 employees), but not for small and medium companies or charities
- Temporary working arrangement for reduced hours must be communicated in writing with employees
- Employees must have been on an RTI between 6th April 2019 and 23rd September 2020
Job Support Scheme (for businesses closed under tier 3 restrictions)
- The government will pay 67% of an employee’s gross wage up to a maximum of £2,100 per month
- No requirement for the employer to top up
A point to note – all Employers NI and pension contributions are the responsibility of the Employer under the JSS, the government grant is for gross salary only.
Business Grants
- Local Authorities to support businesses in the hospitality sector, hotels, B&Bs, and leisure businesses through the way of rates grants
- Properties with a rateable value up to £15,000 to receive grants of £934 per month
- Properties with a rateable value of between £15,001 and £50,999 to receive grants of £1,400 per month
- Properties with a rateable value of £51,000 and above to receive grants of £2,100 per month
- Local Authorities will have a discretionary additional 5% to provide to businesses that are loosely attached to the above sectors
- Those businesses forced to close under Tier 3 restrictions qualify for greater support, up to £3,000
Self Employed
- The SEISS grants provided previously are happening again, for those who were eligible for the previous 2 grants
- The first grant will be for 40% of average trading profits to cover November 2020 – January 2021 paid in one lump sum, up to £3,750
- The second grant will cover February 2021 – April 2021, however, the government has yet to announce the percentage basis for this
Job Support Scheme
The government recently announced the Job Support Scheme (JSS) to protect jobs where businesses remain open but are facing lower demand over the winter months due to COVID-19.
Under JSS the government will contribute towards the wages of employees if they are working fewer than normal hours due to decreased demand. Employers will continue to pay the wages for the hours staff work. Employees must work at least 33% of their usual hours. For the hours not worked, the employer and the government will pay a third each of their usual wages (the government contribution is capped at £697.92 per month).
Expansion of Job Support Scheme
The government also announced an expansion of the JSS, to provide temporary support to businesses whose premises have been legally required to close as a direct result of coronavirus restrictions.
Under this expansion, affected businesses will receive grants towards the wages of employees who have been instructed to and cease work. This will cover businesses that, as a result of restrictions set by one or more of the four governments of the UK, are legally required to close their premises, or to provide only delivery and collection services from their premises.
The government will pay two thirds of employees’ wages, up to a maximum of £2,100 per month. Employers will not be required to contribute towards wages, but do need to cover employer National Insurance and pension contributions.
You can apply for the JSS and the new expansion even if you haven’t previously used the Coronavirus Job Retention Scheme (CJRS). JSS is available for six months, from 1 November, with payment of grants in arrears from early December. The scheme will be reviewed in January.
Search ‘Job Support Scheme expanded to firms required to close due to Covid Restrictions’ and ‘Job Support Scheme factsheet’ on GOV.UK for more details. Further information will be published in the coming weeks.
Job Retention Bonus – guidance now live
Further guidance for the Job Retention Bonus is now available. It includes information about how you can check if your employees are eligible and when you can claim the bonus.
You will be able to claim a one-off payment of £1,000 for every eligible employee you furloughed and claimed for through the Coronavirus Job Retention Scheme (CJRS) and kept continuously employed until at least 31 January 2021. Employers do not have to pay this money to their employees.
To be eligible, employees must earn at least £1,560 between 6 November 2020 and 5 February 2021 and have received earnings in the November, December and January tax months. Employees must also not be serving a contractual or statutory notice period on 31 January 2021.
You clients will be able to claim the bonus from 15 February until 31 March, once you have submitted PAYE information for the period up to 5 February 2021.
Employers can still claim the Job Retention Bonus if they make a claim for the same employees through the Job Support Scheme, as long as they meet the eligibility criteria for both.
Further information can be found on GOV.UK by searching ‘Job Retention Bonus Guidance’.
What you need to do now
If you intend to claim the Job Retention Bonus, you must:
- keep your PAYE submissions up-to-date and on time, with Real Time Information (RTI) reporting for all employees, including reporting the leaving date for any employees that stop working for you in the month they leave or the next Full Payment Submission
- use the irregular payment pattern indicator in RTI for any employees not paid regularly
- provide any employee data for past CJRS claims that HMRC has requested
- make sure all your CJRS claims have been accurately submitted and you have told hmrc about any changes needed (for example if you’ve received too much or too little).
Coronavirus Job Retention Scheme – changes from 1 October
From 1 October, HMRC will pay 60% of usual wages up to a cap of £1,875 per month for the hours furloughed employees do not work.
Employers will continue to pay 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. Employers will need to fund the difference between this and the CJRS grant themselves.
The caps are proportional to the hours not worked. For example, if an employee is furloughed for half their usual hours in October, employers are entitled to claim 60% of their usual wages for the hours they do not work, up to £937.50 (half of £1,875 cap). Employers must still pay their employee at least 80% of their usual wages for the hours they don’t work, so for someone only working half their usual hours they’d need to pay them up to £1,250 (half of £2,500 cap), funding the remaining portion themselves. For help with calculations, search ‘Calculate how much you can claim using the Coronavirus Job Retention Scheme’ on GOV.UK.
You will also continue to pay your furloughed employees’ National Insurance and pension contributions from your own funds.
The scheme closes on 31 October and you will need to make any final claims on or before 30 November. You will not be able to submit or add to any claims after 30 November.
VAT Deferral New Payment Scheme
If you deferred VAT payments that were due between 20 March and 30 June 2020, then these payments need to be made to HMRC by 31 March 2021. The VAT Deferral New Payment Scheme can be used to spread these payments over equal instalments up to 31 March 2022. Alternatively, you can make payments as normal by 31 March 2021, or make Time To Pay arrangements with HMRC if you need more tailored support.
More information on the VAT Deferral New Payment Scheme will be available on GOV.UK in the coming months.
Self Assessment Self-Serve Time To Pay Scheme
Self Assessment tax payers can now apply online to spread the cost of their tax bill into monthly payments without the need to call HMRC. The online self-serve ‘Time to Pay’ service has been increased to £30,000 for Self Assessment tax payers, to help ease any potential financial burden they may be experiencing due to the COVID-19 pandemic.
Once you have completed your tax return for the 2019-20 tax year, you can use the online self-serve ‘Time to Pay’ service through GOV.UK to set up a direct debit and pay any tax that is owed in monthly instalments, up to a 12-month period.
For more information on the scheme, including the requirements you need to meet to use the online service, search ‘Self Assessment tax payers to benefit from enhanced payment plans’ on GOV.UK.
Lockdown Grants
Businesses in England required to close due to local lockdowns or targeted restrictions will now be able to receive grants worth up to £1,500 every three weeks, Chief Secretary to the Treasury Steve Barclay told MPs today. To be eligible for the grant, a business must have been required to close due to local Covid 19 restrictions. The largest businesses will receive £1,500 every three weeks they are required to close. Smaller businesses will receive £1,000.
Payments are triggered by a national decision to close businesses in a high incidence area. Each payment will be made for a 3 week lockdown period. Each new 3 week lockdown period triggers an additional payment.
More detail is available here: https://www.gov.uk/government/news/ministers-announce-new-grants-for-businesses-affected-by-local-lockdowns
With the pre-empted ‘second wave’ seemingly upon us, Rishi Sunak today announced the governments ‘Winter Economy Plan’ to help businesses cope with the new restrictions, as the recovery is put on hold for the winter it would seem. Who knows what further restrictions we will face, so this proactive approach should hopefully help businesses through this tough period.
The key take homes from this plan were the following:
- The new Job Support Scheme to replace the existing ‘furlough’ scheme
- Extension to the Self Employed Income Support Scheme
- Extension in the 5% VAT for the hospitality and tourism sectors
- Extension to the application period for Bounce Back Loans and CBILs loans, as well as changes to the repayment terms
- New payment schemes for deferred VAT and Self-Assessment income tax
Job Support Scheme
To support UK employers who face lower demand due to COVID-19, and to keep employees in work, the government will be introducing a new Job Support Scheme from 1 November 2020. Employees will need to work a minimum of 33% of their usual hours. For every hour not worked the employer and the government will each pay one third of the employee’s usual pay, and the government contribution will be capped at £697.92 per month.
Employees using the scheme will receive at least 77% of their pay, where the government contribution has not been capped. The employer will be reimbursed in arrears for the government contribution. The employee must not be on a redundancy notice. The scheme will run for six months from 1 November 2020 and is open to all employers with a UK bank account and a UK PAYE scheme. All Small and Medium-Sized Enterprises (SMEs) will be eligible.
Self Employed Grant Extension
The SEISS Grant Extension provides critical support to the self-employed. The grant will be limited to self-employed individuals who are currently eligible for the SEISS and are actively continuing to trade but are facing reduced demand due to COVID-19. The scheme will last for 6 months, from November 2020 to April 2021.
The extension will be in the form of two taxable grants. The first grant will cover a three-month period from the start of November until the end of January. This initial grant will cover 20% of average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £1,875 in total. The second grant will cover a three-month period from the start of February until the end of April. The government will review the level of the second grant and set this in due course.
5% VAT Extension for Hospitality & Tourism
The government is extending the temporary reduced rate of VAT (5%) from 12 January to 31 March 2021.
This will continue to apply to supplies of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to attractions across the UK.
Changes to Loan Schemes
The Bounce Back Loan Scheme, CBILS, CLBILS and the Future Fund have all been extended so new applications can be accepted up until 30 November 2020.
Both the BBLS and the CBILS have had their repayment terms adjusted under the ‘Pay as you Grow’ incentive. This will give businesses the option of repaying either of these loans over a period of up to 10 years, extended from the previous 6. This will reduce the average monthly repayments on the loan by almost half.
On the BBLS there is also the option to move to interest only payment period of 6 months at a time, with each business able to action this up to 3 times over the course of the loan, or even pause repayments entirely for up to 6 months, however this is only an option having made 6 full repayments and can only be used once.
New Tax Payment Schemes
VAT deferral ‘New Payment Scheme’ – The government will give businesses which deferred VAT due in March to June 2020 the option to spread their payments over the financial year 2021-2022. Rather than paying in full at the end of March 2021, businesses will be able to choose to make 11 equal instalments over 2021-22. All businesses which took advantage of the VAT deferral can use the New Payment Scheme. Businesses will need to opt in, but all are eligible. HMRC will put in place an opt-in process in early 2021.
Enhanced Time to Pay for Self-Assessment taxpayers – The government will give the self-employed and other taxpayers more time to pay taxes due in January 2021. Taxpayers with up to £30,000 of Self-Assessment liabilities due will be able to use HMRC’s self-service Time to Pay facility to secure a plan to pay over an additional 12 months. This means that Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022. Any Self-Assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s Time to Pay Self-Assessment helpline to agree a payment plan.
We have learned from the previous schemes that often after a week or so, more detail on the newly released schemes becomes available, and we will be keeping a close eye on this to ensure we are up to speed on everything and able to pass that information on to our clients to enable you to make the most of this support.
Rishi Sunak made his first announcement in some time today, announcing a package to support business and individuals coming out of the other side of the pandemic. Support mostly gears towards keeping people in employment, with some help also targeted towards getting trade going again within the hospitality and leisure industry, and also the property market.
These schemes could see support in the region of £30 billion from the UK government. Quite how this will affect tax rates in future years is unclear, but we can probably expect to see tax rates rise in the future to fund this unprecedented level of support.
Job Retention Bonus
In order to support businesses who successfully return people to work after periods of furlough, the Job Retention Bonus has been introduced to reward employers for keeping employees in a job. If an employee who was furloughed at any point returns to work and is still employed at the end of January 2021, having earned on average over £520 per month between 1st November 2020 and 31st January 2020, the employer will receive a one-off payment of £1,000 per employee. This money will be paid in February 2021.
Kickstart Scheme
Aimed at those aged 16-24 who are in receipt of Universal Credit and deemed to be at long-term risk of unemployment, this scheme has been introduced to create high-quality 6-month work placements. Funding for each job will cover 100% of the relevant National Minimum Wage for 25 hours per week, plus the associated National Insurance and auto-enrolled pension costs.
Boosting Worksearch, Skills and Apprenticeships
High-quality traineeships for young people will receive a cash injection, with the government funding employers with £1,000 per trainee whilst also expanding eligibility to those with level 3 and below qualifications, making this kind of work more inclusive and widespread. Business hiring new apprentices will be rewarded with £2,000 to those employing apprentices under 25, and £1,500 to those employing apprentices over this age. This is in addition to the already existing £1,000 for those aged 16-18 or those with an education plan under 25.
Reduced rate of VAT for Hospitality, Accommodation, and Attractions
From 15th July, a reduced rate of 5% VAT will apply to supplies of accommodation, admission to attractions, and supplies of food and non-alcoholic drinks. This will apply until 12th January 2021. Further guidance on this will be released in the coming days, detailing specifics, and we will advise as soon as we can if we think your business is affected.
Eat Out to Help Out
To encourage people to return to eating out, as many people are still cautious about this, food outlets can register to participate in this scheme. What this scheme does is offer every diner a 50% discount on their bill in qualifying eateries, up to a maximum of £10 per head. This discount is available all day, Monday to Wednesday, and for the entire month of August. Participating establishments will be fully reimbursed for this by the government.
Green Homes Grant
The government will introduce a £2 billion Green Homes Grant, providing at least £2 for every £1 homeowner and landlords spend to make their homes more energy-efficient, up to £5,000 per household. For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household. In total this could support over 100,000 green jobs and help strengthen a supply chain that will be vital for meeting our target of net-zero greenhouse gas emissions by 2050. The scheme aims to upgrade over 600,000 homes across England, saving households hundreds of pounds per year on their energy bills.
Stamp Duty Cut
The government will temporarily increase the Nil Rate Band of Residential SDLT, in England and Northern Ireland, from £125,000 to £500,000. This will apply from 8 July 2020 until 31 March 2021 and cut the tax due for everyone who would have paid SDLT. Nearly nine out of ten people getting on or moving up the property ladder will pay no SDLT at all.
Who will pay for it?
These initiatives are thought to cost in the region of £30 billion but its anyone’s guess how these measures are going to be paid for. This then is nowhere near a balanced budget so watch this space. Have no doubt though all of this and the measure in place will have to be paid for at some point.
As ever, we are on hand for any queries you may have surrounding the above schemes. The information available is, as has come to be expected, quite vague, however, the government has promised further information will be available on all of the above ‘within days’ and as soon as this happens we will provide a further update.
A full list of measures is available here: https://www.gov.uk/government/publications/a-plan-for-jobs-documents/a-plan-for-jobs-2020#economic-and-fiscal-context
Rishi Sunak made his first announcement in some time today, announcing a package to support business and individuals coming out of the other side of the pandemic. Support mostly gears towards keeping people in employment, with some help also targeted towards getting trade going again within the hospitality and leisure industry, and also the property market.
These schemes could see support in the region of £30 billion from the UK government. Quite how this will affect tax rates in future years is unclear, but we can probably expect to see tax rates rise in the future to fund this unprecedented level of support.
Job Retention Bonus
In order to support businesses who successfully return people to work after periods of furlough, the Job Retention Bonus has been introduced to reward employers for keeping employees in a job. If an employee who was furloughed at any point returns to work and is still employed at the end of January 2021, having earned on average over £520 per month between 1st November 2020 and 31st January 2020, the employer will receive a one-off payment of £1,000 per employee. This money will be paid in February 2021.
Kickstart Scheme
Aimed at those aged 16-24 who are in receipt of Universal Credit and deemed to be at long-term risk of unemployment, this scheme has been introduced to create high-quality 6-month work placements. Funding for each job will cover 100% of the relevant National Minimum Wage for 25 hours per week, plus the associated National Insurance and auto-enrolled pension costs.
Boosting Worksearch, Skills and Apprenticeships
High-quality traineeships for young people will receive a cash injection, with the government funding employers with £1,000 per trainee whilst also expanding eligibility to those with level 3 and below qualifications, making this kind of work more inclusive and widespread. Business hiring new apprentices will be rewarded with £2,000 to those employing apprentices under 25, and £1,500 to those employing apprentices over this age. This is in addition to the already existing £1,000 for those aged 16-18 or those with an education plan under 25.
Reduced rate of VAT for Hospitality, Accommodation, and Attractions
From 15th July, a reduced rate of 5% VAT will apply to supplies of accommodation, admission to attractions, and supplies of food and non-alcoholic drinks. This will apply until 12th January 2021. Further guidance on this will be released in the coming days, detailing specifics, and we will advise as soon as we can if we think your business is affected.
Eat Out to Help Out
To encourage people to return to eating out, as many people are still cautious about this, food outlets can register to participate in this scheme. What this scheme does is offer every diner a 50% discount on their bill in qualifying eateries, up to a maximum of £10 per head. This discount is available all day, Monday to Wednesday, and for the entire month of August. Participating establishments will be fully reimbursed for this by the government.
Green Homes Grant
The government will introduce a £2 billion Green Homes Grant, providing at least £2 for every £1 homeowner and landlords spend to make their homes more energy-efficient, up to £5,000 per household. For those on the lowest incomes, the scheme will fully fund energy efficiency measures of up to £10,000 per household. In total this could support over 100,000 green jobs and help strengthen a supply chain that will be vital for meeting our target of net-zero greenhouse gas emissions by 2050. The scheme aims to upgrade over 600,000 homes across England, saving households hundreds of pounds per year on their energy bills.
Stamp Duty Cut
The government will temporarily increase the Nil Rate Band of Residential SDLT, in England and Northern Ireland, from £125,000 to £500,000. This will apply from 8 July 2020 until 31 March 2021 and cut the tax due for everyone who would have paid SDLT. Nearly nine out of ten people getting on or moving up the property ladder will pay no SDLT at all.
Who will pay for it?
These initiatives are thought to cost in the region of £30 billion but its anyone’s guess how these measures are going to be paid for. This then is nowhere near a balanced budget so watch this space. Have no doubt though all of this and the measure in place will have to be paid for at some point.
As ever, we are on hand for any queries you may have surrounding the above schemes. The information available is, as has come to be expected, quite vague, however, the government has promised further information will be available on all of the above ‘within days’ and as soon as this happens we will provide a further update.
A full list of measures is available here: https://www.gov.uk/government/publications/a-plan-for-jobs-documents/a-plan-for-jobs-2020#economic-and-fiscal-context
It has been a while since we have written an update, but there hasn’t been much to write home about. As restrictions on movement are lifted, the government’s support is also slowly reducing, and with ‘flexible furlough’ starting next month we thought now would be a good time to remind you of how the support is changing in the coming months.
- July – You can now bring employees back as and when they are needed, with them being paid their full contractual wage for the time they do work, and the shortfall can be reclaimed from the government. This remains at 80% and capped at £2,500, however the cap is pro-rated based on how much time someone is furloughed. For example – if they work 40% of their normal hours, and are furloughed for the remaining 60%, the cap would now be £1,500 (60% of £2,500).
- August – Same as July, but the Employer now bears some of the cost for furloughed workers. Which in practice means the government will no longer subsidise the NI and pension cost for furloughed workers.
- September – The government’s support is now reduced to 70%, with the employer having to top the remaining 10% up to make 80% of the normal wage. The cap for government support, therefore, will be £2,187.50.
- October – Another 10% reduction down to 60%, with the employer now expected to top up the 20% shortfall. The cap for government support then falls to £1,875.
Some important notes
It is important to mention that if you are claiming for furloughed workers under the Job Retention Scheme, you must be paying your PAYE liabilities. This is an important point – you are being granted money which includes a portion to cover these obligations – you, therefore, are expected to pay this. This could be deemed to be ‘misuse’ of the scheme and HMRC may try to claw back this money.
Another reminder is that furloughed workers should not be doing any work – if they are found to have been working the government may claw back the grant by applying a 100% tax rate on it and imposing fines.
HMRC has a task force to try and recover Furlough Money wrongly paid out and have received over 3000 reports so far.
Changes to the Self Employed Income Support Scheme
For those self-employed individuals who have been affected by coronavirus – there is a second grant that can be claimed in August.
HMRC have said on both waves of this grant that ‘your business must have been adversely affected by coronavirus’.
How they will monitor this, we don’t know, but it is worth bearing in mind if you are going to be claiming.
Legislation passed on 29th May gives HMRC powers to recover payments to which recipients were not entitled to and to charge a penalty in cases of deliberate non-compliance.
The differences between this grant and the last one are summarised below:
- This time it is only 70% of average monthly trading profits of the last 3 tax years (not including 2019/20)
- The cap is now at £6,750 total, not £7,500, a reduction of £250 per month
We haven’t got an awful lot of new information to pass on, but this Friday, further information on the changes to the furlough scheme and guidance on how to calculate these new claims are expected to be released.
Important Date to Note
It is, however, important for us to remind you that the scheme closes to new entrants on 30th June, and at that date, any employees furloughed must have been on furlough for a full three weeks.
The official guidance, therefore, is slightly misleading – if an employee is to be claimed for – they must be put on furlough for the first time by Wednesday 10th June at the very latest. It is important to note that if you are to furlough any employees after this date, you will not receive any money back for their wages.
This should only affect new furloughed employees – if they have furloughed in the past then you should be ok.
Furlough Changes by Month (Summary)
From July
- applications will only be accepted regarding staff who have already been furloughed.
- businesses will be given the flexibility to bring furloughed employees back to work part-time. Employers can agree with their employees the hours and shifts their employees will work on their return.
- Employers will be expected to cover the salaries of employees when they are working, with the government supporting them by paying 80% for the period spent not working.
From August:
- The Grant will continue to cover 80% of gross pay but will now not cover the Employers National insurance or Employers Pension costs.
In September
- HMRC will reduce the grant to employers, meaning that they will now pay 70% of gross pay for periods employees are not working, but the remaining 10% (to make up to 80%) will be funded by the Employer.
In October:
- HMRC will then only fund 60% of the gross amount being paid to a furloughed member of staff, with Employers now to pick up the 20% shortfall.
Charges for Future Furlough Claims
We have managed to hold off charging for Furlough claims since they were introduced – we hope this has helped our clients in this difficult time. We were keen to not add to the burden of businesses struggling to make ends meet.
However, the furlough calculations have become increasingly complex and onerous and have been taking up more and more of our time. I am therefore unable to avoid charging for their calculation.
From the 1st July onwards, we will now charge a minimum fee of £15 + VAT per calculation and this gives you half an hour of bookkeeping time. If your claim takes longer than this, we will charge your claim at an hourly rate of £30 + VAT an hour.
We hope for the majority of our clients the claim will cost no more than £15 + VAT.
This charge will come into effect for Furlough Claims after 1st July for July Payrolls and will not be backdated.
It has been a short while since we have had anything of real value to report on, but with many of the schemes offered by the government drawing to a close in this coming month, the end of last week saw Chancellor Rishi Sunak announce further extensions to both the Job Retention Scheme and the Self Employed Income Support Scheme as the pandemic stretches on further than was originally expected.
Self Employed Income Support Scheme – Update
As we are aware, this scheme originally offered 3 months at 80% of average monthly trading profits over the last 3 years, up to a maximum of £2,500 per month. This scheme was originally set to cover March-May but has now been extended, albeit with some alterations.
Self-employed individuals will be able to claim in August for the three months from June, but this time support will be at 70% of average trading profits. This time it will be capped at £6,570 in total.
Job Retention Scheme – Update
The scheme enabling employers to furlough their workers, offered up as a means to stop redundancies, was due to finish on 30th June. With the pandemic stretching on further than first thought, and many businesses still not trading, or only just starting back up with recent lockdown easing, this scheme has been extended to support both employers and employees until 31st October 2020.
New flexibility to bring back furloughed workers part-time from July was announced. This means that furloughed workers can work some hours, for which they would need to be paid at 100% of their normal rate by the Employer, and the government would pick up 80% of any shortfall. As with previously, the employer can choose to top this up if they wished, and holiday must still be paid at 100%. There will also be a new ‘taper’ system, requiring employers to contribute to furloughed salaries from August. This tapering is detailed below:
- August – The government will pay 80% up to a cap of £2,500, but will no longer cover NI or pension amounts, this will now be the responsibility of the employer.
- September – The government will now pay 70% of wages, up to a new capped amount of £2,187.50. Employers will have to top up by 10%, to make the total amount paid to the employee up to the 80% mark.
- October – The government’s contribution will again be cut by 10% to 60%, and now the cap will be £1,875. The employer will again be expected to top up the shortfall, meaning a 20% contribution from the employer.
Importantly – the scheme will close to new entrants on 30th June 2020. This means that anybody that has not been furloughed for a full 3 weeks prior to 30th June 2020 cannot be included in any claim after this date.
Statutory Sick Pay Reclaim Portal
This opened last week, so anyone who was off sick due to coronavirus, be it through self-isolating, or actually having the virus, the full 2 weeks of SSP can now be reclaimed through this portal.
It appears that there has been some great work from the government in prolonging these schemes to enable businesses to slowly return to normal trading, rather than just stop all support entirely at the originally announced dates, and hopefully this will help many businesses come out the other side of this ready to get back to where they left off, and perhaps with a new outlook as to how they can streamline their businesses, with many large companies now looking at flexible home working.
As always, we are on hand for any support or queries and don’t forget we have our ‘Cash Ready Reckoner’ available that we will look over free of charge should you want to use it, to help you reliably project your cash-flow in the coming months as the government support reduces.
Job Retention Scheme Extended
A special announcement in Parliament today from Chancellor Rishi Sunak saw the Job Retention Scheme be extended until the end of October, meaning that by the end of that period the government would have been supporting business in that way for 6 months – a level of support not seen anywhere else globally.
The scheme will remain with the same terms – employees can be furloughed, but they cannot do any work, and the government will reimburse the employer 80% of the cost, up to a maximum of £2,500 per month.
There was, however a mention of changes to the scheme coming into effect from the beginning of August.
The guidance states that from this date, the furloughed workers will be able to return to work part-time, with employers asked to pay a percentage towards the wages of furloughed workers.
Unfortunately, this is all the information we have, so despite strong speculation that the government will cut their support level to 60% from this date, this is yet to be confirmed. This is a big step in staging people back to work, without burdening employers with a full payroll cost whilst still rebuilding their business and beginning to generate revenue again.
We eagerly anticipate more information on this, which is expected to be received at the end of this month. In the meantime, a link to the official release from today is below.
https://www.gov.uk/government/news/chancellor-extends-furlough-scheme-until-october
Bounce Bank Loans
These loans are now rolling into businesses bank accounts.
The government’s Bounce Back Loan scheme allows small firms and sole traders such as hairdressers, coffee shops and florists to apply for a 100% state-backed loan up to £50,000, capped at 25% of a company’s turnover, interest-free for the first 12 months.
The scheme launched on Monday morning and more than 69,000 Bounce Back Loans worth over £2bn were approved during the first 24 hours, the Chancellor confirmed.
Many of our clients report that this process is very easy (apart from Barclays Customers) and have seen a less than a 48-hour turnaround. Contrast this to the CBIL Scheme with loans taking weeks if not months to come through.
Imagine how much more entrepreneurial we would be as a country if the banks took more risk (or any risk at all for that matter). In my opinion, their no-risk approach means business is stifled – perhaps the BBL scheme is too easy but how many otherwise good businesses have ceased trading in the past because banks drag their heals over lending.
Self Employed Income Support Scheme Claims from 13th May
From tomorrow, the eligible, self-employed will be able to claim under this scheme.
Here is how to claim in 3 easy steps:
- Check you are eligible: https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference
- Get your Government Gateway ID and Password Set-Up (Set up may take 5 business days) https://www.gov.uk/log-in-register-hmrc-online-services
- Log in and enter your bank details and a few bits of other relevant info in the claim form released on 13th May
A Safe Working Environment
Finally, a lot has been said about the safe return to work in the past 24 hours, the government have listed some specific guidance on this here https://www.gov.uk/guidance/working-safely-during-coronavirus-covid-19
It’s well worth a read as it does go into a fair amount of detail. Here at Accsys Accountants we have kept the office open but have taken these precautions to keep everyone safe:
- We have installed hand sanitizers in the office entrance and in the main office.
- We are not conducting face to face meetings instead we are using Zoom and the telephone.
- We are working from home and coming into the office in shifts if required.
- We make our own tea now – no more tea round 🙁
I think and hope that some businesses can carry on if we are all sensible and adopt some safe practices.
Job Retention Scheme Pay-outs – where to post these in your books
The Furlough Grant should be treated like any grant and it should be posted it back to the expense code it relates to.
For example, if you receive an apprenticeship grant this should be posted back to the Gross Wages account.
When receiving grants for the Job Retention Scheme these will need to be split between Gross Wages, Employer NI and Pension costs. The figures to use for each category will depend on the claim made.
If we submitted your furlough claim, please contact us and we can help you with finding the figures to split appropriately.
Gateway to the Self Employed Income Support Scheme
If you checked your eligibility after our last update and were found to be eligible you will need to make sure you have your Government Gateway set up to make a claim. https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference
HMRC has specifically said in order to reduce fraud agents won’t be able to apply on our client’s behalf. We only have access to the Agents Gateway so you will need to set one up to claim the funding.
The good news the gateway is very simple to set up:
Instructions on how to create government gateway account
- Go to HMRC’s login page.
- Click the GREEN sign in button.
- Click “Create sign-in details”
- Enter your email address where asked.
- You will now be emailed a confirmation code. Use this code to confirm your email address.
- You will now be issued with a User ID for your government gateway account.RECOMMENDED: Print this page to PDF and file it somewhere safe. The user ID is a digital string so not memorable. Losing this ID can create a lot of work in the future.
An Important Note Regarding Your Furlough Claim – (If submitted by us)
We have been busy submitting Furlough Claims on behalf of our clients and I wanted to raise this point.
I am sure you are aware but when you are submitting your Furlough claim or delegating this to us, you are agreeing that any claim made for employees under the Furlough scheme is in accordance with the Coronavirus Job Retention Scheme terms and conditions and that in order to be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation or any linked or associated organisation.
This includes providing services or generating revenue. Full Terms and Conditions are available here: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme.
We are not checking the validity of your claim and therefore cannot be held responsible should it later be investigated by HMRC and deemed to be erroneous. It is almost certain that HMRC will be investigating these claims when things return to normal.
Please mind the gap – issues with the government support package
We now know a lot more about the Government Finance schemes available and they are impressive that must be said.
Rishi Sunak and his team have done an amazing job, in a short space of time, giving away money all over the place.
The boat is sinking and the lifeboat has been sent and at the risk of complaining about what colour it is, I wanted to highlight some of the gaps in the funding help.
Gap 1
SME’s in serviced offices or those without an office
A cash grant of £10,000 is available for small businesses with a Rateable Value of £12,000 and under. However, many businesses that rent space in serviced offices provided by operators do not have individual business rates assessments, as they pay a fixed all-inclusive monthly service agreement to their office provider to cover rent, rates, service charges.
These businesses would miss out on this grant. Likewise, any business working from home or without a permanent base.
Gap 2
Self Employed with profits over £50,000 & the newly self-employed
The self-employed Support scheme is set to roll out next month but…
If you earned more than £50,000 (or earned less than half of your income from self-employment) in 2018/19, the Government will check your 2016/17 and 2017/18 tax returns, if you filed them for those years. If on average over the three years you earned more than £50,000 and made more than less than your income from self-employment, you won’t be eligible.
£50,000 may sound like a lot but people tend to live to their means and if they haven’t got savings and can’t work then this could be a real issue.
Finally, the newly self-employed miss out as you had to have filed a 2018/19 tax return.
Gap 3
Bounce back loans New Business
This is the new 100% govt backed loan with a 12-month interest and repayment holiday.
Anyone who started trading from 1st March is not eligible for this loan (although if you converted from a sole trader to a limited company you might be.
If your business is not financially viable you will not be able to access this funding.
Gap 4
Employees Furlough
If you started work after the 28th February, chances are you cannot be furloughed if your employer can’t afford to keep you are more than likely to be made redundant.
Gap 5
Limited Company directors
There is a misconception that directors of single director companies cannot be furloughed. They can – however their business would have to completely shut down and they can only do statutory duties, nothing revenue-generating so it’s in their best interest not to furlough themselves.
Plus chances are, even if they did furlough, that they are taking their income as dividends. Furlough only covers the PAYE element so you are missing out on most of your income.
Some directors pay themselves annually at the end of the tax year if this is case chances are you can’t be furloughed.
Gap 6
Scammers everywhere
Lowlife scammers are taking advantage of coronavirus to try to defraud people, especially the elderly and vulnerable.
We have seen an example of this in our office and so would warn people to be vigilant.
HMRC are unusually contacting people on the phone to verify claims but you should never give them your bank details and the best advice here is to call them back.
Gap 7
Business Grants
Only business with a rateable valuable under £15,000 or retail leisure and hospitality business with a rateable value less than £51,000 are eligible.
This means many small businesses will miss out for example:
- A client with an industrial unit with a rateable value of £16,000 missed out whilst his neighbour slightly smaller unit rateable value of £14,500 qualifies.
- Restaurants and Pubs with a rateable value of £52,000 miss out – business has ceased under lockdown but there is no help here.
Gap 8
Almost everyone applying for a CBILS loan
Ok so the banks are processing these but it reported that around 21% of everyone who applied is accepted and these figures are from the banks.
A survey released by the British Chambers of Commerce showed that just 2% of respondents had successfully accessed the CBILS programme this week.
So banks are dragging their heels on this big time.
Contrast this to the speed in which bounce back loans are being processed it proves that Banks are capable of moving at speed but choose not to.
Funding Circle and the like can process loans quickly and efficiently (albeit at a premium) the big banks need to adapt not only for themselves to survive but also to help their business customers survive.
Self Employed Income Support Scheme (SEISS) – Further Information Released
The government today released more information on the Self Employed Income Support Scheme (SEISS).
This scheme, as previously detailed, is for those who receive the majority of their income through self-employment, up to trading profits of £50k and have filed a tax return for the tax year 2018-19
These individuals can receive 80% of their income, up to a maximum of £2,500, to cover the drop in work seen due to the coronavirus, for the months of April, May and June
This is calculated by taking the average trading profits of the tax return for the tax year 2018-19 and the two preceding tax years
If an individual was not self-employed for the whole three years, they will just use as much of that period as they do have recorded
The new info is:
• From today (4th May), HMRC will begin contacting those who are eligible for the SEISS.
• Individuals or their agents can check their own eligibility on the following link using their UTR and their government gateway login credentials. https://www.tax.service.gov.uk/self-employment-support/enter-unique-taxpayer-reference
• Once the check is complete, they will be given a date when they can submit their claim
• The claims service is going to be opened on 13th May, with claims being paid out from 25th May, and after this date within 6 days.
Now Open – The Bounce Back Loan Scheme
As detailed last week, this launched today and is seen as a more accessible that the CBILs loan and is 100% guaranteed by the government.
In addition to what we previously announced last week, the following additional information is available:
• The interest rate is fixed at 2.5%, unlike a CBILs loan where the interest rate is set by lenders.
• Money can be borrowed on a term of up to 6 years
• No fees, interest or repayments are due in the first year
This has seen the minimum CBILs loan increase to £50,001 to differentiate between the schemes, so if you have taken a CBILs loan for £50k or under, then you can get this converted over to a Bounce Back Loan.
The full eligibility requirements are as follows:
• Eligible business must be based in the UK and established by 1 March 2020.
• They will need to generate at least 50% of their income from trading activity and show that this has been disrupted due to Coronavirus.
• Businesses cannot have been in difficulty on 31 December 2019 and cannot be in bankruptcy or liquidation at the time of applying for a Bounce back loan.
• Businesses that are already claiming under other Government schemes to support their business, such as CBILS or the Bank of England’s Covid Corporate Financing Facility Scheme cannot also hold a Bounce back loan. The only exception is if the Bounce back loans is being used to payback the other Government loan scheme.
• Some business sectors are excluded from Bounce back loans, these include banks, insurers, reinsurers, public-sector bodies, further education establishments in they receive grant funding, state-funded primary and secondary schools.
Again, your first port of call for this should be your banking provider for ease of accessibility, however, there are a number of lenders accredited to the scheme.
• Barclays
• Clydesdale Yorkshire Bank Group
• Danske Bank
• Lloyds Bank
• NatWest
• Santander
• Royal Bank of Scotland
• Ulster Bank
The scheme is currently open until 4th November 2020.
All banks are taking their own approach on this we have seen a number of clients complete forms with their own banks but it remains to be seen what other information will be required.
Cheap Borrowing or an unnecessary debt?
This is some of the cheapest borrowing I have ever seen, so if you have other debt that you want to pay off, maybe credit card debt or other loans, it could be worth getting a loan under this scheme to consolidate.
Crucially though this is only for up to 25% of your turnover. So you may be better of applying for a CBIL if you need more than this.
New Rates-Based Grants Support
Last week a further pot of money was announced to support those businesses who don’t have business premises, or they sub-let from somebody else with rates included, and they perhaps haven’t got the support many of customer-facing businesses have.
Each Local Authority will be designated some money to distribute to applicants as they see fit.
As far as we can tell, there is no set criteria or set amount that you can receive, nor is there any guidance yet on the application process, but if you do fall into this category, and you are struggling for cash, we would recommend a quick call to your Local Authority, as they may be able to provide further information on this.
More details on this can be seen here: https://www.bmmagazine.co.uk/news/government-pledges-extra-617m-for-businesses-based-in-shared-working-spaces/
Coronavirus Bounce Back Loan Scheme
Good news for many small businesses who were struggling to gain access to the CBILs loans, with banks wanting business owners to jump through hoops and then offer personal guarantees as well – Chancellor Rishi Sunak yesterday announced the ‘Bounce Back Loan’ scheme.
This scheme is targeted at small and medium-sized businesses affected by COVID-19, and offers loans of up to £50,000 which are 100% backed by the government. The amount borrowed can be up to £50,000 up to a maximum of 25% of the businesses turnover. Meaning if your turnover was £100K last year you can borrow £25,000.
This loan will be 100% guaranteed by the government, with no fees, interest or repayments due for the first 12 months of the loan. The government are currently working with lenders to ensure a low rate of interest is agreed for the remaining part of the loan.
Important things to note are:
- Your business must be UK based
- Have been negatively impacted by the coronavirus
- Not have been in any financial difficulties at 31 December 2019
- You cannot apply if you have already received a CBILs loan – if you have already received a CBILs loan of up to £50k, you can speak with your lender and ask to transfer this to a Bounce Back Loan
- The government have promised a short online form with little red tape.
The scheme is expected to be launched on 4th May, and we will update in the coming days as and when more information is available.
It remains to be seen if banks can cope with the inevitable demand for this scheme.
Thank You, HMRC
My two biggest adversaries in my career have been banks and HMRC. The banks have done very little to change my view in this crisis but HMRC has done themselves proud. The first payments for the Coronavirus Job Retention scheme have started appearing in businesses owners banks.
We have processed 100’s of claims and only had one issue where the system has caused a problem with the claim.
Well done HMRC great work. Relatively simple guidance, and easy to use portal and a timely payment what more can we ask for.
Support Finder Launched
For anyone unsure what support they may be eligible for, the Government have released the ‘Support Finder’ on the below link which, after answering a few short questions, will give you information on the support available to your business based on these answers.
Another week in this unprecedented business environment has given us the following news…
100% Government-Backed Loans?
Rumour has it that the chancellor is considering providing 100% guarantee on loans to micro-entities for amounts borrowed up to £25,000.
We have no details, this hasn’t been announced but the FT has reported that the government are considering this.
The idea presumably is to help those businesses who are not eligible for the CBILS’s scheme and those who probably, under normal circumstances, wouldn’t dream of borrowing. And those businesses who are new who haven’t got the previous trading history to qualify for a loan.
Watch this space for an announcement next week.
Coronavirus Job Retention Scheme Portal
The end of a week which has seen the Coronavirus Job Retention Scheme portal open and this has resulted in a busy week for us, as we work hard to process your claims, and will continue to do so until the scheme is closed.
Our first claims were submitted on Monday, the day the portal opened, and with the promise of money being paid out within 6 days, we would expect to hear from some of our clients on Monday that they have received some money back.
A few points to note on this:
- If we produce your payroll -we will process your claim unless instructed otherwise by you
- We have had reports that the Employers helpline is closed, as all associated call handlers have been moved on to COVID-19 related matters. So please be aware of this if you were planning to make a call
- HMRC have also been telephoning some people to confirm that they had made a claim before confirming it their end – this is not a guarantee that this will happen, nor is it indicative of any problems with claims, just be aware that you may receive a call, and it is not necessarily a scam. With this being said, please be cautious with giving over personal information on such calls, just in case it did turn out to be a ca
- For those not aware – the scheme is now running until the end of June
If you are producing your own claim:
- If you do produce your own claim, please keep a note of your claim reference number – you won’t receive this via email
- Also please keep your calculations you may need these in the future
The government’s calculator is available here: Government Calculator
The government have produced a handy step by step claim guide available here.
Statutory Sick Pay Rebate Scheme
The Statutory Sick Pay Rebate Scheme is still being worked on, and we await further news on that. Once this is up and running we will pass on this information and work to help our clients to action any SSP reclaims that require processing.
VAT Returns
With the upcoming VAT deadline in just under 2 weeks – please be reminded that VAT returns do still need to be filed it is simply the payment that is being deferred until 31 March 2021 at the latest, and not the return itself. If you intend to utilise this deferral, please cancel your direct debit with HMRC, as they will continue to take this payment as normal if you do not.
IR35 Rules Delayed
The off-payroll reform surrounding IR35 – for anyone who is not familiar with this term, it most probably does not relate to you, but it covers those individuals operating under a Ltd company and working almost entirely for one company, or ‘contracting’ as such – has been deferred to the tax year 2021-22 instead of this current tax year in light of COVID-19.
As always, if we can be on hand with anything to assist your business through this difficult time, please do let us know.
Today was the big day – the launch of the new Coronavirus Job Retention Scheme portal for employer reclaims!
We have began submitting claims for our clients, and will continue to do so for those clients for whom we process the payroll. We will be processing this once we have had your information for April’s pay run, and will continue to submit these going forward until the scheme has finished. If anyone has any cash flow problems and has urgent requirements to get the money, then please communicate this to us so we can get your claim processed as soon as possible.
The portal requires mostly information that we already hold, but in submitting your claim we need to give bank details for where the reclaim should be paid, and the address to which this bank account is registered. If you could please send this information over with April’s pay run information, this will speed up the process.
In addition, if you could please let us know if any employee’s status has changed, perhaps you have removed them from furlough, or an employee that was not previously furloughed now is – it is your responsibility to update us on any changes. A link to further information on this portal is detailed below.
The portal opened at 7am and saw claims for 67,000 employees processed within the first half hour – but it is a case of ‘so far, so good’ and despite high volumes there have been no technical glitches and it all appears to be running smoothly, with promise of funds within 6 days of submitting your claim – we will be sure to update you on this once we have seen the evidence.
A few things that have cropped up today from our clients that may be of use to others:
Can I re-employ someone who left employment with me in March?
The answer is, yes. This is, in fact, the government’s solution to helping those workers who missed an RTI submission for their new employer prior to 19th March 2020. If a former employee who left employment with you during March approaches you and asks you to re-employ them to furlough them, you are not obliged to do so, but you can do this at no extra cost to your business, provided you don’t top their wages up and only pay them 80% of their respective wage.
Who will process my claim?
As mentioned above, if we process your payroll, we will do this for you.
What happens to my employees’ holiday they had booked but are now furloughed?
The ultimate decision on this lies with the Employer. You can let them still take the holiday, but it is recommended that to avoid any HR issues, they are paid holiday at 100%, and not 80%. Option two is to let the employee make the decision – ask them if they still want the holiday. Finally, you as the employer can cancel the holiday to avoid having to top the wage up, provided you give them at least the same amount of notice as the period of holiday itself – i.e 1 week for 1 weeks of holiday.
If anyone has any further queries surrounding the Job Retention Scheme, furloughed employees, or anything in general that we could do to help your business at this difficult time, please do not hesitate to contact us.
I hope you had a Good Easter and managed to take your mind off the situation we are in just a little bit.
There have been some tweaks to various schemes available that I would like to share with you.
Grant Income
Our clients are now seeing these Grants rolling in – if you haven’t applied then, please do so ASAP. Income from these Grants should be recognised as Other Revenue in your accounts with No VAT – it’s not vatable but will be taxable.
Here is my guide to the grant schemes available: Our guide to the coronavirus business grants
Coronavirus Job Retention Scheme (CJRS) portal
HMRC announced plans this week to open the online CJRS portal:
- The scheme is due to go live on 20th April, with first payments being made 10 days later
- Future claims will be paid within four to six days
- The online CJRS service is now undergoing beta testing with a group of selected employers
- Applicants will access the system using their current government gateway login
The good news is that Agents will be able to access the portal for their clients so, if we run your payroll for you, we will be able to file your claims on your behalf.
Please be patient with us – this whole situation has meant an increased pressure on Payroll across the board. At the best of times we cannot offer a same day payroll service, and these aren’t the best of times!
Payrolls are taking much longer than normal, so please bear that in mind when providing your payroll info.
CJRS furlough cut-off date
When the scheme was first announced, individuals had to be employed by the firm furloughing them on 28 February, but the Government has extended the eligibility date to 19 March – the day before the scheme was announced.
However, there’s a technical caveat here – you need to have made a payroll submission about your new employee to HMRC on or before 19 March. Therefore, anyone paid monthly will more than likely not be reported to HMRC until after this date.
Why the 19th?
This is the date that the government announced the scheme and they obviously feared that millions of people rushed to add employees after this date.
Who loses?
Any monthly paid employees who started after 28th February are still not eligible for the scheme.
Coronavirus Business Interruption Loan (CBIL)
The pace of these loans is still low but is increasing. UK Finance said lenders had received 28,461 applications from businesses to the scheme, with 6,016 approved to date totalling £1.115bn in value.
Banks are still woefully slow in responding and asking a lot of business owners to get the loan approved.
We are hoping for further changes here to ease this funding.
Read our guide to the CBIL scheme here: Our guide to the business interruption loan scheme
Business Interruption Insurance Claims
Many of our clients are finding out that they are not insured for this pandemic, even though they have business interruption clauses.
In a letter to the heads of insurance firms, the Financial Conduct Authority today said: ‘Based on our conversations with the industry to date, our estimate is that most policies have basic cover, do not cover pandemics and therefore would have no obligation to pay out in relation to the pandemic.’
Please read your policy carefully and do claim if you can. Insurance companies are reluctant to pay out but have been warned by the FCA that they must do more.
Tax Planning with shares
This crisis has seen a considerable drop in the value of shares; if you hold shares with any sort of value and were considering gifting these to a family member now might be a good time.
For example, let’s say you held shares worth £50,000 before the crash, but are now worth £25,000 and you gave them to your child – they would now only incur CGT on the gain up the current value above the annual £12,000 CGT allowance. If you thought these shares will eventually bounce back, then now would be a good time to do this.
This gift would also be a potentially exempt transfer for IHT with the value locked in at £25,000 if the giftor doesn’t survive 7 years.
The difficulty is knowing when the best time is to do this, in case the share value drops further.
Bed & Spousing
This is where one spouse sells equities to crystallise a loss (to be set off against future gains) and the other buys them back. HMRC could always challenge this by using their general anti-tax avoidance legislation. However, you could sell Barclays and buy Lloyds in order to maintain a portfolio’s exposure to a sector.
The 30-Day Rule
If you wish to repurchase an investment that you have recently sold, you must wait 30 days between the two transactions in order for you to utilise your CGT exemption, or create a loss to offset against other gains realised within the same tax year. If 30 days haven’t passed, the investment retains the original base price rather than resetting to the new purchase price.
Build your tax shelter
You can currently put £20,000 per annum into a Stocks and Shares ISA. If you want to retain existing shareholdings but would prefer them to be in the tax efficient ISA wrapper, you can ‘Bed and ISA’ the holding(s). A ‘Bed and ISA’ transaction allows you to ‘transfer’ shares that you already own from outside a tax shelter into an ISA. Under HMRC rules, existing shares must be sold and repurchased using the funds available within your ISA.
Please seek independent financial advice before making changes to your share portfolio.
Our New Normal
Just a reassurance that we are still working to help your business get through this crisis. We have been helping with Grant Applications, Loan Applications, answering queries and doing lots of Accounts, Bookkeeping and Payroll.
I wanted to give you an insight into how we are working. Firstly, everyone is working from home but using their office computers via Any Desk.
As I write this, I am sitting here in my office alone, watching 5 computers work away but without the people in the seats.
I have to say I miss my team, but I am grateful for the hard work they are putting in. Our calls have been diverted to Adam, who is taking messages and diverting calls.
On the plus side I have now got complete control of the office Spotify and I have been playing a few guilty pleasures this week that I just wouldn’t get away with if anyone else was here and the tea round is very small!
I, like all of you, am looking forward to getting back to normality.
Grant Income
The first grants under the Small Business Grant Funding Scheme, are starting to be received by our clients who applied for them 7 days ago. Some councils are better organised than others in this respect.
We are advising clients to post these on their bookkeeping system to Other Income. The income is not VATable but it is taxable.
If you haven’t applied for your Grant, then we suggest you should do so ASAP, by contacting your local council.
HMRC Payment Deferments
We have seen client successes on deferring tax payments, some of our clients have reported that they have got straight through on the phones and have had no issues arranging deferment. HMRC are making it easy – well, much easier than they normally do!
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. The number is 0800 024 1222.
Coronavirus Business Interruption Loan Scheme
Feedback on this hasn’t been great with call backs from some banks taking weeks. What is clear you will need a Management Accounts and a Cash Forecast that demonstrates a need for the loan. I get the feeling this is a box ticking exercise on the Cash Forecast front, but they will never admit it.
The Cash Forecast should show a problem that the loan overcomes and then returning to normality in the future to re-pay the loan.
If you are thinking of taking out a CBIL loan, then get the ball rolling now as it could take 2 weeks to go through.
Surviving a Downturn
At the risk of piling on the misery, the reality is that, economically, we are facing huge upheaval and uncertainty and whenever that happens recessions soon follow. During recessions, some businesses thrive and grow but the majority contract and many go out of business.
The three features of those businesses that survive recessions are:
1 Good Cashflow
2 Efficient Operations
3 Taking advantage of opportunities
Good Cashflow
Take a look at the following articles available on our website for Cash flow tips:
Ways of dealing with your Cashflow Problems
https://www.accsysltd.co.uk/ways-of-dealing-with-cash-flow-problems/
The Perfect Credit Control System
https://www.accsysltd.co.uk/getting-paid-on-time-the-perfect-credit-control-system/
Our guide to Cash forecasting
https://www.accsysltd.co.uk/cash-flow-forecast-template/
Ultimately, cash is everything in a recession, getting it in with efficient credit control and keeping it by reducing overheads.
Also if you hold stock, keep it to a minimum – it ties up cash.
Efficient Operations
Being efficient can mean many things but ultimately its about reducing waste. Waste occurs in every business and builds up, unseen, without realising it. Waste occurs in every process too – it could be a waste of time, a waste of money or a waste of opportunity.
Recessions kill wasteful or inefficient businesses.
Here are some ideas to eliminate waste from your business:
- Review your overheads line by line to see what is essential and what can be cut.
- Are you using too much paper – consider being paperless.
- Do you have too many employees? Are you using them in the right way?
- Use technology to your advantage – deliver documents electronically, get electronic signatures
- Are you still receiving cheques in the post – encourage customers to pay by card or BACs
- Are you duplicating effort in your processes? When is the last time you looked to improve the way things are done?
- Are your products or services wasteful? Are you taking more than the necessary steps in producing them? Are you over producing?
- Do you produce jobs with problems or defects that could be rectified before they happen?
- Look at your customer service – are you the best option for your existing customers.
- Are you wasting money on marketing tactics that aren’t working? Measure the response you get from each marketing tactic
Look for opportunities
Recessions can bring opportunities for those with their eyes open to them.
It could be that you have been struggling for years in the wrong business so there is an opportunity to start something new. Or it could be you have some cash to invest. Recessions often present opportunities if you are fortunate to be able to spend.
Even if you can’t invest when things are at a rock bottom price, you could launch new initiatives or products to get ahead of your competition.
The Frequency of these updates is changing.
As the government’s announcements slow down so does the content of these updates we will, therefore, be scaling back the frequency of these updates. We will still update you when there is some real news or helpful advice but not necessarily every day.
If something changes or we receive any news you need to know we will issue an update.
In the meantime please feel to contact us with any questions you may have.
3rd April 2020
Business Interruption Loans,
Some further detail was released today on the Business Interruption Loans, and it will be good news for many of our clients – the government have now banned loan providers from asking for personal guarantees on loans under £250k under the Business Interruption Scheme, and therefore pass on the government-backed 80% guarantee instead.
Many business owners were wary of personally guaranteeing loans given the uncertainty in the economy at the minute, so this should enable more businesses to secure the funding they need to see them through the lockdown. Link to the article is below.
We have received feedback from clients looking for a loan that their bank mangers have changed their tune literally overnight. So a small victory here.
SSP reclaim for COVID-19 related absence
New online guidance has today been released surrounding the SSP reclaim for COVID-19 related absence.
The service is not yet up and running to process these reclaims, but HMRC is working on this. Aside from the information already released, stating that employers can reclaim up to 14 days of SSP for any employee either suffering from coronavirus, or self-isolating at home, the following additional information has been added:
- The scheme is open to any UK company that had a PAYE scheme set up and fewer than 250 employees on 28 February
- The scheme will be open until further notice
- The records that must be kept for at least 3 years after the claim are as follows:
- The reason why the employee was absent
- Details of when the employee could not work (from and to dates)
- Details of the qualifying days the employee could not work
- NI numbers of all employees who you have paid SSP to
#askRishi
Rishi Sunak has been hosting his #askRishi today on Twitter, and the issue of people starting new jobs in March was brought up. Unfortunately, there is no movement on the rules surrounding furloughing, and 28th February 2020 is still being used as the cut off point, however, he did offer up the opportunity of contacting your previous employer and asking them to take you back on and furlough you until this is over.
This is all well and good if you left on good terms, however many employers’ noses are often put out of joint by employees leaving and this may not be an option for many. There is plenty of pressure still being put on, so feel free to tweet @RishiSunak if this affects you.
Some Business Owners are not being supported.
Directors who pay themselves a small salary and the rest via dividends are only entitled to 80% of their PAYE salary which for some is just not enough to get them through.
These same business owners who have not got business premises are not entitled to any of the Grants either.
There is growing anger from these business owners who feel left out of any rescue plan.
There is actually a petition with 263,000 signatures to treat these business owners in the same way as the Self Employed – https://www.change.org/p/uk-parliament-small-ltd-company-directors-to-get-government-support-like-the-employed-and-self-employed
We are committed to helping you during this crisis
Never in my working life have so many businesses faced so many challenges in such a short period of time. We have literally all moved from enjoying the freedoms of business this country allows to being unable to trade in just a few short weeks.
During this time, we have tried hard to help support your business as best we can but I wanted to re-iterate how we can help.
We can and are helping people with:
- Understanding what overheads can cut from your business
- Providing a cash forecasting template and guidance on how to complete
- Telephone and Email Advice regarding government support
- Hep completing loan applications
- Helping with Grant Applications
- Help with claiming grants under the Job Retention Scheme
- Calculating Furlough Pay
- Access to our Facebook Group – for business to offer each other news and support
- Proving historical income information when requested
- Regular updates to keep you informed
As I previously mentioned all of this is provided FREE of charge we will not charge you extra for support relating to the Coronavirus – your business is important to us we want you and it to come through this.
The Latest News
Overdraft Fees
Some banks are beginning to contact their customers to inform them that during a given period (varies by bank), they will not be charging fees on their overdraft facilities, nor will they be charging interest on any overdrawn balance that occurs during that given period.
Credit Cards and Loans
The FCA is putting pressure on credit card companies and loan providers to offer a three month holiday on repayments, in the same way we have seen mortgage companies offering, many of which have been extremely forthcoming with this. There is also pressure for the credit card companies to not charge interest for these 3 months, nor should any of the temporary measures taken during the COVID-19 outbreak affect credit scores.
Business Interruption Loans
We are seeing more pressure being put on the banks by key cabinet members, including the Business Secretary, to be more forthcoming with offering the CBILs instead of offering their own products and asking for personal guarantees in the first instance.
Rishi Sunak, Chancellor of the Exchequer, will be responding to questions on the respective business support packages on offer via his twitter account (@RishiSunak) tomorrow. This can be done by tweeting your question with the hashtag ‘#AskRishi’. This may be the time to put pressure on about the Business Interruption Loans and get the cabinet to force the banks into being more forthcoming with these products.
For now, we are just waiting on news of the portal opening for the job retention scheme, with no further developments. There were no business announcements on the daily briefing last night, and it was entirely health-based, hopefully some more business-related information is fed through in the coming days.
Tonight then I have written about the Essential Actions to Ensure Your Business Survives COVID-19 plus a couple of new questions we have answered for clients today.
Essential Actions to Ensure Your Business Survives COVID-19
The challenges faced by small business right now are unprecedented and in order to survive this, you need to be pro-active in your approach.
This BBC headline states that nearly a 5th of all smaller business will run out of cash in the next four weeks. https://www.bbc.co.uk/news/business-52114414
This guide is to help you plan the action you need to take right now.
- Do a cash forecast – however simple it is a cash forecast is what you need to help you identify when and if you are going to run out of cash – if you need a template email will@accsysltd.co.uk
- Furlough all non-essential workers – agree with your employees that this is the action you are going to take – write to them and ask them to agree with a contract variation to furlough them and send them home. If we run your payroll let us know the details and we will submit a claim for you.
- If you can, apply for the grant from the council – the links to online forms are now available from your local council
- Cut spending – print out your P&L and go through it, line by line, and look what spending you can cut back on.
- all non-essential spending should be cut – now is the time to stop that second Amazon Prime subscriptions or that CRM you forgot to cancel.
- Talk to your landlord and or mortgage adviser about putting off payments.
- Call HMRC and arrange time to pay your tax
- Consider the CBIL from your bank – apply for this loan but be warned this won’t be easy to get, prepare for your application by making sure you have a cash forecast and your latest set of financial accounts – also management information if accounts are older than 6 months. PLEASE DO NOT SIGN PERSONAL GUARANTEES if you can avoid it.
- Get ready for full lockdown – if we go on full lockdown can your business cope – can the phones be diverted will you have access to your computers?
- Go – Is it feasible for you to sell your goods online? If so and you have been putting it off now is a great time to start
- Communicate with your customers – Customer need reassurance that you will be there when things settle down – set up an email group – update your website but please do communicate with them.
Hopefully, by now you will have taken some or all of these actions but I thought a reminder wouldn’t hurt.
Please call if you would like to discuss any of these points.
Questions from today
Some interesting questions we have been asked today surround SMP, some interesting information is detailed below. (ref: businesswest.co.uk)
I have a member of staff currently on maternity leave. Can I put her on furlough and reduce how much I pay her?
Statutory maternity pay (‘SMP’) is governed by the Social Security Contributions and Benefits Act 1992. The amount of SMP is calculated on the basis of the salary actually received during the 8-week period ending immediately before the 14th week before the expected week of childbirth [see https://www.acas.org.uk/managing-your-employees-maternity-leave-and-pay/…. As such, if an employee has already commenced their maternity leave, then the amount which they are entitled to receive will have already been determined. It would not be permissible to reduce the amount to which they are entitled by statute by seeking to put them on furlough. However, in theory, there is nothing to prevent you from placing an employee on furlough who is on maternity leave (subject to my observations below). The government guidance on those on maternity leave is that:
“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.”
Thus it would appear that if your business offers enhanced contractual maternity pay, then it would be possible to furlough that employee in order to receive financial assistance with the payment of any enhanced maternity pay. However at present, it is not entirely clear how this would work in practice. There is nothing in the guidance which would prevent a woman on maternity leave from agreeing to be furloughed, thus bringing her maternity leave to an end. This would likely prevent her from returning to her maternity leave at a later date.
I have a pregnant employee and I understand that she is therefore in a high-risk category- can I automatically put her on furlough leave?
Given that the advice for pregnant women is to stay at home and avoid social contact as much as possible, many pregnant women may be keen to be put on furlough leave. However given that maternity pay is calculated on the basis of pay actually received during a set 8-week period, some mothers-to-be may be concerned about the financial impact on their maternity pay of being furloughed and may, therefore, wish to continue to work and receive full pay, if possible. The best thing for businesses to do is to have an open dialogue with pregnant employees about these issues and ascertain what your employee wants to do as a starting point. It may well be that in your particular industry, it is simply not possible for a pregnant woman to continue to work (e.g. a factory worker in a factory which has closed) and so there is no other option than to put them on furlough. However many businesses are able to continue providing work for staff (for example, by providing them with a computer and allowing them to work from home). If a pregnant employee was able to continue to work from home, yet was furloughed because of her pregnancy, then you may well face a claim for direct sex discrimination.
The last update of the month, and this is a quiet one. There have been no new updates as to when the portal will be opening to claim the Job Retention Grants for furloughed employees, and this seems to be one of the more commonly asked questions by our clients at present. As soon as this is up and running, we will be in touch with those clients who we process the payroll for and have furloughed some of their staff, in order to collate any further information we may need to facilitate this claim.
Annual Leave and Furloughed Employees
We have received numerous queries surrounding the annual leave entitlements of furloughed workers. Many of our clients are concerned that staff will have an entire year’s worth of holiday to take in a short space of time once business is back to normal. It is true that employees accrue holiday whilst on furlough, but the government introduced last Friday a scheme by which employees can carry forward annual leave not taken from this year for two years going forward. This should hopefully help relieve some pressure on businesses looking to recover after the downtime whilst in lockdown.
10k Business Rates Grants
Good news for any of our clients falling under Maidstone Borough Council who are eligible for any of the rates-based grants – they have been contacting people today via email, so if you qualify for one of these grants and your Local Authority is Maidstone Borough Council, expect to hear from them soon. Alternatively you can fill out the form on the following link https://my.maidstone.gov.uk/service/10K_Business_Rates_Grant.
Medway Council have also said they will be contacting people within the next few days, but to speed up this process you can apply online using the following link https://www.medway.gov.uk/xfp/form/305.
Tonbridge and Malling Borough Council don’t have a link on their website, but they have been contacting people, so if you fall under their jurisdiction and you qualify, you should hear from them soon.
If you need any help with these forms please call.
Increase in Contactless Limit
It has been announced today that from tomorrow, the contactless spend limit on contactless bank cards will be increased from £30 to £45. Despite this being a possibility, it may take a period of time before all vendors are able to offer this, as this will require software updates to card machines and till systems, but this will begin to be rolled out from tomorrow, hopefully contributing in reducing the risk of transmission of COVID-19.
Job Retention scheme
The most commonly asked questions at present seem to be surrounding the job retention scheme, so here is a link to the official guidance surrounding the scheme, detailing who is eligible, how pay is calculated, how to reclaim and many more details.
https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
There hasn’t been much news today from the government with regards to it’s support for businesses but we have learnt some things from our clients:
- The Grant Application Process has started for some, Ashford Council and TMBC have allowed people to apply for grants – no news from Medway or Maidstone for most.
- The Banks are still asking for personal guarantees and are still not making finance easy – Anyone applying is being reminded that you are still 100% responsible for the debt and are being asked to complete personal wealth information.
- Some business are falling through the gaps and can’t pay their staff and can’t get funding. Business is not getting easier that is a fact.
Tonight’s update is all about:
- Employee Retention Scheme and Payroll
- Cash
Employee Retention Scheme
As the end of the month is now upon us, it is a busy time for payroll. With this in mind, we have had a lot of questions surrounding the ins and outs of the job retention scheme and furloughing workers, so here are a few of the most commonly asked questions of the day.
Can an employee still do some work if they are furloughed?
HMRC and government guidance states that an employee is not to carry out work of any kind while furloughed. They may carry out training, for which they should be paid, but they should not carry out any operational duties.
Can Directors be furloughed?
Yes, Directors can be furloughed. They too must not be carrying out any revenue generating activities, but they can carry out admin tasks in order to ensure their business is ready to go once the lockdown is complete. This will, however, be limited to 80% of their monthly salary, and not inclusive of any amounts taken as dividends.
What happens with employees who receive regular commission?
Commission is not to be included in calculations for furloughed workers. If employees receive a salary + commission package, the 80% furloughed amount will be based on their salary only. Any top up on top of this is at the business’ discretion, and will not be repaid under the Job Retention Scheme.
I have a new starter that started in March, can they be furloughed?
In reality, yes they can. With this being said, the Job Retention Scheme does only cover employees who were on the payroll at 28 February 2020, so any wages paid to this employee while furloughed will have to be entirely financed by the company, the government will not repay this.
What if I can’t afford to pay their wages?
If there is no physical cash available to pay the wages, then they cannot be paid. If all avenues have been explored, such as VAT deferrals, Time to Pay arrangements on PAYE/Corporation Tax/CIS, payment holidays on regular commitments and the business has been unable to get a loan, then the final option is to communicate to the employees that they will be getting paid, but not until the government repays the money under the furlough scheme, and wait for the grants to start being repaid in this way.
Is the portal open yet?
No there is no active portal as yet. It has been said that this will be up and running by the end of April. Please keep an eye on our Facebook group and website updates as we will be posting here is soon as the portal is active.
How do I upload my claim to the Portal?
If we run your payroll we do this for you free of charge – if you run your own payroll we will help you with guidance. The portal is likely to be fairly simple and will require some key information – PAYE Ref, Details of Each Furloughed Worker, Bank Details etc.
What about if 80% of my employee’s wages will put them on less than minimum wage?
The NMW and NLW do not apply to furloughed workers. These can only apply to hours worked, and as a furloughed employee there are no hours worked, thus NLW and NMW do not apply.
Cash
There is an old saying in business Turnover is Vanity, Profit is Sanity and Cash is King. At the moment Cash Is Everything. You need to keep hold of it and make sure you are covered for all the outgoings that may face you in the coming weeks and months. This is on a business and personal level.
If you are not forecasting your cashflow then email will@accsysltd.co.uk and request a copy of our cash forecast.
Now is the time to make sure you only pay the essential utilities and cut back on anything deemed non-essential. Call major suppliers and ask for better payment terms. Do all you can to prevent yourself running out of cash.
As always we are keeping an eye out for further developments on all things business related in respect to Covid-19, but it has been a fairly quiet day today on that front, with more updated and details expected on the already-announced schemes in the near future.
Banks are now under pressure in the media for not freely offering the government guarantee for the Business Interruption Loans, so we would expect some changes on this in the coming days.
After yesterday’s release of the Self-Employed Income Support Scheme, today has seen more information released surrounding the Job Retention Scheme, making it more clear exactly who qualifies, how it will be calculated and how this will work for Employers.
Further information on the Job Retention Scheme
In addition to the previous information we have posted on this scheme, further details were released yesterday:
Who qualifies?
The scheme is open to all UK employers that had created and started a PAYE scheme on or before 28th February 2020, including Companies in administration and is the responsibility of the administrator. Employees must have been on the payroll at 28th February 2020, and covers full and part time staff, agency staff and those on zero hours or flexible working.
The scheme covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.
Employees hired after 28th February 2020 do not qualify. Those on unpaid leave cannot be furloughed, unless this happened after 28th February.
Employees on sick leave or self-isolating should get SSP but can be furloughed after this.
Employees with more than one job can be furloughed for each job. Each job is treated differently, so they can be furloughed from one and continue to work in the other. The cap applies to each employer individually.
Conditions
Employees must not be working. This includes employees on reduced hours or working for reduced. If they are still working, it will be the employer’s responsibility to pay them in line with the terms of their employment contract.
Employers should write to employees confirming that they have been furloughed and keep this on record.
How it works
Employers 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.
Full time and part time employees’ salaries as of 28th February should be used to calculate the 80%.
If an employee has pay which varies and has been employed for a full 12-month period prior to the claim, you can claim for the higher of the same month’s earnings from last year and the average monthly earnings from the 2019-20 tax year. If they have been employed for less than 12 months, the claim will be for the average of their monthly earnings since they started work. If the employee only started in February 2020, a pro-rata for their earnings to date can be used as the basis of calculation.
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.
National Living Wage/National Minimum Wage does not apply. This only applies for actual hours worked – employees on furlough will not be actually working any hours.
Employees must be furloughed for at least 3 weeks.
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).
Footnotes
- You should make your claim at the point at which you run your payroll or in advance of an imminent payroll – (We help with this)
- If there is not the work for employees once the scheme ends, they can be made redundant at the end of the furlough scheme
- Grants must be included as income on the Company tax return and is subject to corporation tax at the usual rate – (We help with this)
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.
DIRECTORS
We await official confirmation, but information sources are stating that Directors will be eligible for this scheme and can be furloughed. This will, of course, only apply to their salaried amount, and not their dividend top up, as is the structure for many of our clients, and is the case for the majority of Directors in small OMBs throughout the UK.
They will not be able to formerly undergo work, but can continue to maintain their business (assuming covering off admin tasks and financial tasks, not operational/trading). Once this is officially confirmed we will announce this both via email and on the Facebook group.
Thank You
I thank you all for you message of support for this email and the Facebook group. We exist to help support you and are more than happy to continue to send this as long as you are happy to receive it.
Self Employed Income Support Scheme
It has been announced that Self-employed workers will now be eligible to receive 80% of their average monthly profits declared on their tax returns over the last 3 years, up to a maximum of £2,500 per month. This scheme is open for 3 months and may be extended.
This is open to anyone with trading profits of up to £50k and receives the majority of their income from self-employment.
The scheme will be open no later than the beginning of June, however they are hoping to bring this forward if possible.
Self-employed workers must have a tax return filed for 2018-19 tax year, and if they have missed the deadline they have 4 weeks from now to get that filed.
No action needs to be taken – HMRC will contact those eligible for this grant and there will be a short online form and grants will be paid directly to the self-employed worker shortly after this form is submitted.
If you have just started being self-employed it appears you may fall through the cracks on this.
There are not many details at this point but more may become apparent in the coming days.
Rates-based Grants
One of our clients has confirmed that Tonbridge and Malling Borough Council have been in touch regarding the rates based grants, as have councils in other areas of the UK, so we would expect other Local Authorities to follow suit and start contacting businesses who are eligible for any of the following schemes in the next few days:
- Business rates holiday for retail, hospitality and leisure
- Cash grant for retail, hospitality and leisure
- Small business grant funding
In addition to the above, it was also confirmed late yesterday that estate agents, lettings agencies and bingo halls are also now eligible for the business rates holiday applicable to the retail, hospitality and leisure sectors.
I am a little concerned that people calling, asking you to visit a website and enter your bank details could be fraud. This may not be the case but be vigilant if you receive a call from the council please be 100% sure before entering your bank details.
UK Banks Business Interruption Loan Links
It appears that many of the UK’s banks are not offering the CBILs scheme in the first instance, and are instead offering their usual borrowing means, and then only passing on the government-backed guarantee if the business cannot offer security themselves. Which I am sure goes against the spirit of what the government intended but that’s banks for you.
Many of the banks are also only offering loans to their existing customers, so on the below link is a list of alternative lenders which may be able to help if your bank cannot.
Below is a list of the UK banks that are accredited to offer the scheme, and a link to the information on their website, with a quick snapshot of the information available.
Barclays – https://www.barclays.co.uk/business-banking/borrow/coronavirus-business-interruption-loan/
Although not stated anywhere on their website – it’s is being fed back from our clients that Barclays are not forthcoming with the CBILS and are instead first pointing businesses in the direction of their existing products before offering the CBILS as an option. We await further information on this as Barclays responded on Twitter to suggest this was not the case.
HSBC website states that a CIBLS loan may be available to you if you:
- Are an existing HSBC business customer.
- Operate in the UK.
- Have an group annual turnover of no more than £45m.
- Operate in a sector that is eligible for CBILS
- Have a sound borrowing proposal and are a viable applicant but may lack adequate sufficient security to meet our standard commercial lending criteria.
- The purpose of the loan meets the standard CBILS eligibility criteria, for example:
- Starting trading.
- Developing a project.
- Short-medium term cash flow concerns.
- Expanding an existing business.
- Purchase of equipment.
There is no mention of this only being offered in the instance that the business does not qualify for one of the bank’s existing loan products.
Lloyd’s state they are available to offer businesses a government backed lending facility where they meet the British Business Bank’s eligibility and Lloyd’s own credit criteria, but wouldn’t ordinarily be able to access lending products because of availability of security. If a business is eligible within the existing criteria this scheme does not apply.
Metro Bank – https://www.metrobankonline.co.uk/coronavirus/coronavirus-business-customers/
Don’t currently have anything in place but they are working on it and this page will be the go-to place if you are a Metro Bank customer.
NatWest and do not sound like they will be very forthcoming with passing on the government guarantee. Their website states that you’ll need to apply for one of their loan products using the normal application process. If you are not eligible to receive finance against their standard lending criteria, they will be able to consider your application under the CBILS scheme.
Again, another bank only offering the scheme if they cannot offer you a form of borrowing under their usual terms. They are recommending you contact your relationship Director in the first instance to check your eligibility.
RBS advice is the same as NatWest and does not sound like they will be very forthcoming with passing on the government guarantee. Their website states that you’ll need to apply for one of their loan products using the normal application process. If you are not eligible to receive finance against their standard lending criteria, they will be able to consider your application under the CBILS scheme.
TSB – https://www.tsb.co.uk/business/coronavirus/
TSB have confirmed they will be implementing the Coronavirus Business Interruption Loan Scheme. They expect to have more information for customers in the coming days. They have stated, however, that in the meantime, business customers needing immediate support have access to a range of alternative solutions including extending overdraft facilities or refinancing existing lending.
Some of our clients have begun to use alternative methods of funding, exploring the options of credit cards with long interest-free and transfer periods, as well as the option for the over 55s to access their pension funds – dependant on the type of scheme and values involved. Contact your IFA or us for a recommendation of someone who can help.
We will not charge you extra
I wanted to pledge that we will not charge any of our clients extra for providing information to help them complete forms for grants or loans. We cannot pledge to complete your loan / grant applications for you as we are facing staff shortages too but if you need any information or are unsure on what you have been asked we are happy to help free of charge.
In fact we will not charge you extra for any telephone or email support you receive during this crisis or for any extra work required to place your employees on furlough with HMRC, you are our valued clients and we want to support you at this time.
It’s a team effort
Finally, a big thank you for my team for their sterling efforts in providing information for this email and the Facebook group – especially Kurt who is just starting with Accsys Accountants, what a week to start a new job, he is already having an impact.
After waiting in anticipation for more information on the previously announced schemes, unfortunately we will be waiting a bit longer as information has not been forthcoming.
There was, however, confirmation during Prime Minister’s questions today that an announcement on support for self-employed workers would be announced by the Chancellor of the Exchequer in tomorrow’s evening briefing, and I know a number of our clients had an interest in being kept in the loop regarding this.
Further details we do have are as follows:
Protection from eviction for commercial tenants
More information on this was released. Commercial tenants who cannot pay their rent because of COVID-19 will be protected from eviction. This rent will still be due, and is not a rental holiday, but no business will automatically forfeit their lease if they miss a payment between now and 30th June 2020. This will come in to force when the Coronavirus Bill receives Royal assent, which is expected to be before the end of the month and no action is required by the tenant or landlord.
Commercial insurance
Most commercial insurance policies are unlikely to cover pandemics or unspecified notifiable diseases, such as COVID-19. However, those businesses which have an insurance policy that covers government ordered closure and pandemics or government ordered closure and unspecified notifiable disease should be able to make a claim (subject to the terms and conditions of their policy). Insurance policies differ significantly, so businesses are encouraged to check the terms and conditions of their specific policy and contact their providers.
COVID-19 has now been added to the government list of notifiable diseases, so it may be worth businesses checking their policies for any reference to cover for ‘unspecified notifiable diseases’, although there may be some caveats on this. In addition, if any business on the list included on the below link has cover for government ordered closure, they may have grounds for an insurance claim.
It is unlikely a businesses would be covered for something like this as a standard part of their policy, many of the publications mentioning this state that this would usually be requested by the company, but it is definitely worth spending some time checking your insurance documents.
Rates-based grants
Any of the rates based grants can be expected to be rolled out from early April, as Local Authorities will receive the money for this from central government on or before 1st April 2020.
We are still waiting for further details on the Employee Retention Scheme, which seems to be the most important one for your clients, and as soon as we have more information we will pass this on.
Opinion – Banks are letting us down
I feel we are being let down by our banks, once again, who are asking for security before offering the Government Backed Loan Scheme – this is the way EFG worked but, in my opinion, it shouldn’t be this way. Any business should be able to apply for funding without having to offer personal guarantees – these are exceptional circumstances and we need an exceptional response from the banks. This is not happening at the moment I have sent messages to both Rishi and Boris let’s see if they reply ?
If you haven’t already, please join our Facebook group on the following link https://www.facebook.com/groups/kentbizCoronavirus/ for latest UpToDate support and information.
Today has been a day of radio silence in terms of further information from the Government on the various schemes available to our clients, so unfortunately we do not have too much more information to pass on.
The Business Interruption Loans, however, have now been rolled out as of yesterday, and a number of our clients have reported back that they are in the application process. Just in case it has passed you by through previous communications, below is a link of the accredited providers, and our suggestion is that your first port of call be your banking provider.
We have negative feedback from some clients that some providers (Barclays) are trying to sell their products before the CBIL backed scheme.
This is not a blanket lending scheme if your business is not viable or the bank would of lent it before the crisis I
We have also put together some FAQs below which address some of the most common questions we are being asked at present.
Are self-employed people eligible for the 80% grant, or what support is available to self-employed workers?
At present there is no 80% grant in place for self-employed workers as there is under the Job Retention Scheme for employed workers. This is something that has been heavily discussed within parliament today and over recent days, so we would expect some form of announcement in the coming days.
How do I apply for the Job Retention Scheme grant?
At present – there is no application process as HMRC are in the process of developing a portal for this. Employees will qualify for this if they have been designated as ‘furloughed’ – which means they must have been put on leave as there is no work for them. This is capped at £2,500 per employee.
Are Directors eligible to be designated as furloughed?
As it stands – we do not have an answer on this. This is one of the most common questions we are being asked, but given the vague information currently provided, we simply cannot answer yes or no. We would anticipate that the salary element of Directors’ wages would be covered, but any dividend top-up would not, but cannot confirm either way.
How does my business apply for the small business grant?
Any business occupying a property and receiving SBRR or RRR will be notified by their local authority of their eligibility for a £10k grant. There is no application process and you do not need to do anything. Local authorities will be in touch in due course. The same applies for any rates-based grants available, including the Business Rates Holiday and the Cash Grant for Retail, Hospitality and Leisure.
How does the VAT deferral work?
The VAT deferral applies from 20th March – 30th June 2020 – any VAT payments during this time can be deferred until the end of the 2020-21 tax year, and again, there is no application process. Any business who would usually pay VAT by Direct Debit does need to cancel this with their bank if they are going to take advantage of this deferral as HMRC will still try to take it. Any refunds/reclaims will be repaid by HMRC as normal.
In addition to the above, we are currently awaiting more information on the following key points:
- Will Directors be included in the 80% job retention scheme and be able to be listed as furloughed?
- Will there be any roll out for the self-employed to subsidise their wages whilst out of work outside of the Universal Credit option already offered?
- The roll out date for the online portal to reclaim 80% of the costs of furloughed workers under the job retention scheme
- A date from when the local authorities will be rolling out the rates-based grants
FT Article
This is a good read
https://www.ft.com/content/bd63d562-6d1b-11ea-89df-41bea055720b
If you haven’t already, please join our Facebook group on the following link https://www.facebook.com/groups/kentbizCoronavirus/ where Kurt will be posting updates as and when he has more information and answering any queries you may have.
As it stands, not much more information has been released regarding any of the assistance available to businesses, however, we do expect this to change tonight following Boris Johnson’s latest update.
In summary, with regards to the Business Interruption Loans, the below link shows a list of accredited loan providers, with the majority of the UK’s top banks included.
Our recommendation would be, in the first instance, if your bank is listed, to contact your designated relationship manager at the bank and see if they can provide information on how to apply.
At present, using Barclays as an example, they have acknowledged the loan, but not provided details on how to apply via their website, but they have referred to a helpline, which I’m assuming will be the case for most banks.
With regards to the Employee Retention Scheme, again, no further information has been released on how this will work or how to apply – we anticipate this will be in the coming days to avoid as many job losses as possible. This is the one that the majority of our clients seem most interested in so we will be watching for updates on this intently.
We await Boris Announcement but are feeling a growing sense of frustration that things aren’t moving quickly enough.
Business move at a 1000 mph but Governments move considerably slower than this.
Whatever Boris says tonight regarding small business support it will mean absolutely nothing without detail to support it.
Covid-19 Response Officer – (New Job Title)
I would like to Introduce Kurt Robinson who is joining Accsys Accountants today as a Senior Client Manager. Kurt’s first mission is to take charge of our Covid-19 response. He will be dedicated to helping all of our clients get the help they need from the government.
Kurt will be watching and reading everything to do with the crisis from a business perspective and feeding this back to you on Facebook and via email.
Kurt will also help if you need help with Grant documents, loan applications etc.
He will also be your main point of contact for Covid-19 on the telephone. Feel free to call me or your CM’s but Kurt will have his finger on the pulse of the help available.
Kurt is a part-qualified accountant with 6 years’ experience and has been following this issue very closely.
Kurt is available on the landline 01622 671835 or his email is Kurt@accsysltd.co.uk.
Please do join the Facebook group Accsys Coronavirus Support Group – I cannot seem to invite you but if you search for the group on Facebook Desktop you can request to join – we have 40 members so far. I will email updates as well but Facebook gives us a forum to share ideas and help.
Please feel free to share with anyone in business who might find the group useful.
Updates
As of right now still there are still no details of what we need to do to apply for funding but the situation is fluid and so when the info comes in you will hear from me and Kurt.
Some amazing announcements from the chancellor tonight with some comments from me.
- 80% of wages paid starting in April – (Unprecedented – contact HMRC to apply but will they be there to answer? Will this apply to all businesses or only those who have been told to close by the Government or staff who have been told isolated)
- VAT payments to end of June deferred until the end of the year – (Great as long as customers still keep paying)
- Next Self-Assessment payments deferred until Jan 2021 – (this will help but not until June)
- Business Loans interest fee for 12-months – (This is good again if we can actually access this from the bank)
If the government can back this up with the infrastructure and deliver this then this will help a lot of small businesses and their employees.
Again we don’t have access to any of this now or full details of how to apply but it will be coming as soon as we know more we will let you know.
I have been contacted by many of you who are justifiably worried about your businesses especially around cashflow and paying staff. More and more business owners are considering redundancies for staff some are cutting pay and hours.
If you are thinking that is a possibility for you then this page has details of the payments your employees will be entitled to: https://www.gov.uk/redundancy-your-rights/redundancy-pay This is aimed at the employee but gives some good information. Please do take HR advice if you are going to go down this route.
However, I am optimistic that tonight’s announcements will help stop mass staff redundancies but we wait and see.
The Grants
There is no further news on this other than you will be contacted by the local authority – I am not optimistic on this because the councils will have their own staff issues and I can’t see they will be able to deal with 1000’s of grant applications any time soon.
We are not sure how the Local Authority will ascertain that your business is entitled to the higher grant level but one idea is to make sure your SIC code at Companies House shows that you are actually in the Retail, Hospitality and Leisure sector. If you could be in this sector we will review these for you today and talk to you before changing them. It may help we don’t know at this time.
Loans – no news here yet but will keep you posted.
Time to pay
The time to pay line is extremely busy – Carly attempted to call to get some guidance for you and here is her experience yesterday…
There are not many tax advisers in right now so expect to be on hold a while (literally hours…) it does say if it’s not an emergency then call next week where they’re hoping to be less busy. I’ve stopped trying now (an hour and 4 minutes last night and now 20 minutes this morning) but I feel bad hogging the line when it’s not an emergency. Will try next week again like they say on the automated message.
BUT what it did say is it’s a helpline for businesses and self-employed concerned about paying upcoming and outstanding tax liabilities due to coronavirus, which gives me a good idea that it’s not just going to be say March’s liability they can help with. Probably safe to say it’ll be whatever’s outstanding (so February’s, March’s) and then “upcoming” (so April & May?)
Anything to do with recovering SSP or benefits etc isn’t what that number is for. Literally is to help with spreading payments for self-assessment, PAYE, VAT & corp tax.
We will try again next week and get some answers in the meantime if you have tax due call the number but be prepared to wait a while.
Please feel to call if you have any particular concerns or worries but we will keep you posted with news as it comes in.
Some more detail regarding the support the government announced last night can be found here: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses
This support includes:
- a statutory sick pay relief package for SMEs
- a 12-month business rates holiday for all retail, hospitality and leisure businesses in England
- small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
- grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
- the Coronavirus Business Interruption Loan Scheme to support long-term viable businesses who may need to respond to cash-flow pressures by seeking additional finance
- the HMRC Time To Pay Scheme
A couple my thoughts on this:
- Nothing is in place yet – other than the business support line detailed below for taxes due now – (please note HMRC need to be aware of the tax due before you can spread this)
- Grant funding is provided by the Local Authority and they will contact you and is only available for those who pay business rates (as far as I can tell)
- The loan scheme provided through the banks and is a security guarantee scheme. Banks are useless at the best of times and I hope I am wrong about this but I don’t hold out much hope of the bank pushing through loans on this scheme quickly.
We will know much more next week and will keep you posted.
If you have any specific questions not included in the above guidance please let us know – however, we are in a similar boat to everyone else so will try and read and distribute information as it happens.
Tonight there will be further announcements from the Government regarding help for businesses but for now here is what we know:
Deferring Tax Payments
HMRC have set up a phone helpline to support businesses and self-employed people concerned about not being able to pay their tax due to coronavirus (COVID-19).
The helpline allows any business or self-employed individual who is concerned about paying their tax due to coronavirus to get practical help and advice. Up to 2,000 experienced call handlers are available to support businesses and individuals when needed.
Tel: 0800 0159 559
Call them when you have a tax amount due tell them you are struggling as a result of COVID-19 and they will help you spread the payments.
I would wait until tomorrow until the above announcement to call though as I think guidance may change.
Government Lending
Whilst not direct lending from the government it has been announced that the government will offer a guarantee to banks to lend. Banks are notoriously slow at processing loans with this sort of security so if you need to borrow then contact them sooner rather than later.
Paying Employees
The government have announced that any employees who are off sick, with the virus or who are self-isolating following government guidelines, will be paid statutory sick pay (SSP) from day 1 rather than from day 4.
Normally, employers cannot reclaim SSP however, this can be reclaimed for those off sick with the virus or who are self-isolating following government guidelines for up to 14 days. SSP is currently £94.25 and is reclaimed by reducing your current and future PAYE liabilities. However, the government are working on a refund mechanism for this so watch this space.
If we complete your payroll we will take care of this for you.
Working from home
From a HR point of view we have not received any guidance from the government on this, however, we are checking for any new updates daily, but for now this ACAS link below may be able to answer a few of your questions and concerns:
https://www.acas.org.uk/coronavirus
A sensible approach seems to be offering employees the opportunity to work form home, if their job can be done efficiently from home. If you intend to cut pay or hours then take HR advice and talk to your employees early to let them know the reality of the situation.
As mentioned this is a wait and see time at the moment hopefully we will hear more tonight.
Cashflow
Cashflow is likely to become a major concern for many businesses at this time, the advice here is, as it always is when cash is tight, get the cash in, delay paying suppliers where you can and arrange time to pay on any long term debts. Review overheads and cut anything not essential.
Have a read of these blogs on our website:
- Don’t call the bank first – Try these alternative ways of dealing with cash flow problems
- Getting Paid On Time – The Perfect Credit Control System
- Our essential guide to cash forecasting
Accsys Accountants
We are working as usual with some of us working from home. Communication may be slightly slower but calls can be transferred and emails will be answered.
We will keep you updated as things change.
Frequently Asked Questions
- All
- Business Interruption Loans
- Job Retention Scheme
- Rates-Based Grants
- Self Employed Income Support
- Time to Pay Taxes
Most of the UKs major banks offer this, along with a number of alternative lenders. It is recommended that your first port of call should be your current banking provider.
This was the case, however, the government passed new legislation over a week ago to force banks into offering these schemes and passing on the guarantee, whereas prior to this Directors were being asked for personal guarantees. This is not to say they won’t ask for guarantees for the additional 20% not backed by the government (they will only back 80%) but this may make this option more attractive to businesses feeling the effects of COVID-19.
See our guide on this page for more information.
If you are a business that would otherwise be in a position to receive finance if it wasn’t for the drop in trading due to COVID-19, then it is highly likely you would qualify for a Business Interruption Loan. You must be able to show a drop in trading as a result of the current situation.
No – Directors are not self-employed, they may have to file a self-assessment tax return, but this does not make them self-employed. Unfortunately, dividends are classed as investment income, not trading income and therefore is not qualifying income.
Self-employed individuals are now able to claim for up to £2,500, or 80% of their average monthly trading profits from the 16/17, 17/18 and 18/19 tax years. This is not income, but profits, so the element that tax has been paid on (income less expenses). If there are less than 3 returns available, this figure will be taken from the returns available. This is not open to people who were not self-employed during 18/19, those who are primarily receiving income from employment, have profits of over £50k.
Unfortunately not – all grants are rate-based and some are industry dependent. Therefore without a business premises, you don’t qualify for business rates and therefore no grant is applicable.
Many of those eligible for the grants based on small business rates relief have now been contacted, and many have completed the application process. The payment date is Council-dependent, we have had reports of Tonbridge and Malling paying out for this, but others, such as Maidstone, have opened up applications but not released funds yet. We will update as and when our clients feed this information back to us.
Any business occupying a property and receiving SBRR or RRR will be notified by their local authority of their eligibility for a £10k grant. There is no application process and you do not need to do anything. Local authorities will be in touch in due course. The same applies for any rates-based grants available, including the Business Rates Holiday and the Cash Grant for Retail, Hospitality and Leisure.
Given that the advice for pregnant women is to stay at home and avoid social contact as much as possible, many pregnant women may be keen to be put on furlough leave. However given that maternity pay is calculated on the basis of pay actually received during a set 8-week period, some mothers-to-be may be concerned about the financial impact on their maternity pay of being furloughed and may, therefore, wish to continue to work and receive full pay, if possible. The best thing for businesses to do is to have an open dialogue with pregnant employees about these issues and ascertain what your employee wants to do as a starting point. It may well be that in your particular industry, it is simply not possible for a pregnant woman to continue to work (e.g. a factory worker in a factory which has closed) and so there is no other option than to put them on furlough. However many businesses are able to continue providing work for staff (for example, by providing them with a computer and allowing them to work from home). If a pregnant employee was able to continue to work from home, yet was furloughed because of her pregnancy, then you may well face a claim for direct sex discrimination.
Statutory maternity pay (‘SMP’) is governed by the Social Security Contributions and Benefits Act 1992. The amount of SMP is calculated on the basis of the salary actually received during the 8-week period ending immediately before the 14th week before the expected week of childbirth [see https://www.acas.org.uk/managing-your-employees-maternity-leave-and-pay/…. As such, if an employee has already commenced their maternity leave, then the amount which they are entitled to receive will have already been determined. It would not be permissible to reduce the amount to which they are entitled by statute by seeking to put them on furlough. However, in theory, there is nothing to prevent you from placing an employee on furlough who is on maternity leave (subject to my observations below). The government guidance on those on maternity leave is that:
“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.”
Thus it would appear that if your business offers enhanced contractual maternity pay, then it would be possible to furlough that employee in order to receive financial assistance with the payment of any enhanced maternity pay. However, at present, it is not entirely clear how this would work in practice. There is nothing in the guidance which would prevent a woman on maternity leave from agreeing to be furloughed, thus bringing her maternity leave to an end. This would likely prevent her from returning to her maternity leave at a later date.
Unfortunately not. This was brought up to the Chancellor, Rishi Sunak, last week, and the suggestion from the government is to contact your previous employer and ask to be rehired and furloughed through them, and then let go at the end of the period. This is not an option for many employees, as quite often employers are not that happy when an employee moves on, so this is not the best solution.
If we run your payroll we do this for you free of charge – if you run your own payroll we will help you with guidance. The portal is likely to be fairly simple and will require some key information – PAYE Ref, Details of Each Furloughed Worker, Bank Details etc.
In short – no. There has, however, been some good news released in the last few days. There have been a number of select Employers chosen to Beta test the portal and it has worked well, and should be able to cope with 450,000 claims per hour. The expected launch date for this is 20th April, and it is thought that this will give HMRC time to process repayments in time for the end of April, both for April and a backdated claim for March. As soon as this is officially open we will notify our clients and begin assisting with claims for those whom we process the payroll.
The NMW and NLW do not apply to furloughed workers. These can only apply to hours worked, and as a furloughed employee there are no hours worked, thus NLW and NMW do not apply.
If there is no physical cash available to pay the wages, then they cannot be paid. If all avenues have been explored, such as VAT deferrals, Time to Pay arrangements on PAYE/Corporation Tax/CIS, payment holidays on regular commitments and the business has been unable to get a loan, then the final option is to communicate to the employees that they will be getting paid, but not until the government repays the money under the furlough scheme, and wait for the grants to start being repaid in this way.
The commission is not to be included in calculations for furloughed workers. If employees receive a salary + commission package, the 80% furloughed amount will be based on their salary only. Any top up on top of this is at the business’ discretion, and will not be repaid under the Job Retention Scheme.
Yes, Directors can be furloughed. They too must not be carrying out any revenue-generating activities, but they can carry out admin tasks in order to ensure their business is ready to go once the lockdown is complete. This will, however, be limited to 80% of their monthly salary, and not inclusive of any amounts taken as dividends.
HMRC and government guidance states that an employee is not to carry out work of any kind while furloughed. They may carry out training, for which they should be paid, but they should not carry out any operational duties.
You can defer it – but you cannot do so without notifying HMRC, this only applies to VAT. In order to do this, you need to set up a Time to Pay arrangement with them. You can do this by calling their dedicated helpline, the number for which has now changed, on 0800 024 1222.
Do I still need to file my VAT return if I’m going to defer my payment, and do I need to notify HMRC I am going to defer?
Yes – the VAT return does still need to be filed. There may still be penalties/surcharge periods imposed for any late VAT returns. Payments can be deferred once the VAT return is filed however, and you do not need to notify HMRC of your decision to do so. This is for any liabilities due between 20th March 2020 and 30th June 2020. Payments for these should be made before 31st March 2021. Any business who would usually pay VAT by Direct Debit does need to cancel this with their bank if they are going to take advantage of this deferral as HMRC will still try to take it. Any refunds/reclaims will be repaid by HMRC as normal.
Our Coronavirus Finance Guides
Follow the links below to access our guides:
Our guide to the Coronavirus Job Retention Scheme
Our Guide To The Self-employment Income Support Scheme
Our Guide To The Business Grant Scheme
Useful Links
The Governments Support Page –
UK Banks Business Interruption Loan Links
Many banks are only offering loans to their existing customers, so on the below link is a list of alternative lenders which may be able to help if your bank cannot.
Below is a list of the UK banks that are accredited to offer the scheme, and a link to the information on their website, with a quick snapshot of the information available.
Barclays – https://www.barclays.co.uk/business-banking/borrow/coronavirus-business-interruption-loan/
Metro Bank – https://www.metrobankonline.co.uk/coronavirus/coronavirus-business-customers/
TSB – https://www.tsb.co.uk/business/coronavirus/
Local Council Links
Links to local councils COV-19 Support Pages
- Ashford Borough Council
- Canterbury City Council
- Dartford Borough Council
- Dover District Council
- Folkestone and Hythe District Council
- Gravesham Borough Council
- Maidstone Borough Council
- Medway Council
- Sevenoaks Council
- Swale District Council
- Thanet District Council
- Medway Council
- Tunbridge Wells Borough Council