The self-employed income support scheme (SEISS) was announced on 26 March, and now we have more details of how this scheme will work in practice. Details below:Coronavirus support for the self employed – update 9.4.20
Currently, most of the questions being asked of us are in respect of the support available for employees. Whilst the guidance provided by the Government has been updated, there is still a lot we do not know and are probably not going to get black and white answers to, for all situations. However, I thought it would be useful to share some of the frequently asked questions to help you. There are 3 documents covering 48 questions, but I would suggest you start on the most recent, Q31-48, as some of the earlier ones have now been superseded.
Please note, at the moment it is still not possible to actually make the claim.
I’ve also attached a slightly updated Furlough agreement – this should be signed by both you as employer and the employee who is being put on Furlough and retained for your records.
One of the points that has come out of the recent guidance is that to apply for the recovery of the Furlough payment you will need to have an online HMRC PAYE account. Many of you already have this in place, as you would require it for VAT but you may not have PAYE attached to it, especially if Liric have been your payroll agents. We will send out a separate email with the relevant information on how to apply for this, or to attach PAYE to an existing account.
The link to the Government guidance on the CJRS is https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme
There is one question we have been asked more than any other by directors since the furloughing
guidelines were issued…
Can I furlough myself?
We would like to share our updated thoughts on this subject and why you don’t have to (completely)
make your mind up just yet.
Download the PDF with more information below:Furlough Leave Agreement
Download the leave template below:Furlough Leave Agreement – Word Document
HELP FOR THE SELF EMPLOYED
Chancellor Rishi Sunak has announced measures to support the self-employed and partnerships.
The scheme is called the Coronavirus Self-employment Income Support Scheme (CSEISS). Please read more below.Coronarvirus Self-Employment Support Scheme update
The government has published further details of the Coronavirus Job Retention Scheme (otherwise known as the Furlough Scheme).
Coronavirus Job Retention Scheme
It is unclear whether HMRC intends to rely on this guidance only, or whether there will be actual legislation.
The full guidance is here:
You need to read it; this summary is not going to be enough.
Here are the key points, some of which had not previously been announced:-
- the scheme is open to all UK employers that had a PAYE scheme in place on 28 February 2020
- any organisation with employees can apply, including charities, recruitment agencies and public authorities; however, the government does not expect public sector employers to use it as long as central government continues funding wage costs in the normal way. With agency employees, the scheme is only available for agency employees who are not working.
- employers can reclaim up to 80% of wage costs up to a cap of £2,500 per month, plus (not including) the associated employer NICs and minimum autoenrolment pension contributions on that wage. Fees, commissions and bonuses are not included.
- an employer can choose to top up to 100%, but does not have to (subject to employment law and renegotiating any contractual entitlements)
- for employees whose pay varies, the employer can claim for the higher of (i) the same month’s earning from the previous year (eg earnings from March 2019); or (ii) average monthly earnings in the 2019-20 tax year
- individuals are only entitled to the minimum wage for the hours they work. So if they are furloughed and do not work, and 80% of their normal earnings would take them below the minimum wage based on their normal working hours, they still only receive 80% as they are not working. However, they are entitled to be paid NMW for any time spent training.
- to be eligible, the employee must have been on the payroll on 28 February 2020. If they were hired later, they are not eligible. Anybody who was on the payroll on 28 Feb and has since been made redundant can be rehired and put on the scheme
- furlough leave must be taken in minimum blocks of three weeks to be eligible for funding
- there is nothing in the guidance which prohibits rotating furlough leave amongst employees, provided each employee is off for a period of at least three weeks
- the employee must not be working at all. If they work for even an hour (presumably during their entire three week furlough period), they are not eligible. However, they are able to undertake training and do volunteer work, provided they do not provide services to or make any money for their employer.
- when agreeing changes in hours (and acceptance of 80% pay), assuming the contract does not already allow for that, normal employment law applies. The employer must be careful not to discriminate in deciding who to offer furlough too. My view is that prioritising vulnerable workers is unlikely to be discrimination, as prioritising the over 70s (direct age discrim against those under 70) is almost certainly justifiable, and those who do not suffer from serious health conditions are not a protected class.
- employees on sickpay or self-isolating cannot be furloughed, but can be furloughed afterwards. Employees who are shielding can be placed on furlough.
- employees on maternity (or similar) leave can continue to draw SMP (or similar) payments. The guidance does not prohibit women on maternity leave agreeing to return to work early and then being furloughed, or electing to change to shared parental leave and then being furloughed.
- employers can only claim once every three weeks, ie they cannot get weekly reimbursement. Claims can be backdated to 1 March 2020.
The government will issue further guidance on the mechanics of claiming the payment in due course. It says it expects the scheme will be up and running by the end of April.Coronavirus Job Retention Scheme: Details
Attached is some general information about the scheme. The advice is to go to approach your own bank initially. My Barclays manager has shared with me the minimum information that would be required to proceed with a request – see below. Clearly this will require some assistance from us if you wish to proceed with an application.
The huge advantage that we will have to pull the necessary information together for those of you who use our Xero or other cloud based platform for your book keeping, is that we can see your numbers, they are up to date and we can link these into other tools we have to generate the reports to show the impact a downturn in trade may have, what additional funding is required and also project forward to prepare the necessary forecasts required – so please get in touch with us if you require our help in this.
The last 2 years trading accounts, with management accounts for 2019 if 2019 full accounts are not available
All Key Directors to complete as “statement of assets and liabilities and expenditure” documemnt
Explain what the key impacts of Coronavirus have been, not just ‘Coronavirus’ but some specifics e.g. loss of clients walking through the door, forced shutdown, staff sickness.
What are your largest costs currently e.g. staffing costs, business premises costs, stock and or/other debt costs and what are you doing/done to reduce these?
Does you have up to date cash flow forecasts? Please send these to me even if basic.
When the Pandemic is resolved, how long do they believe it will take to start recovery? What challenges will you face e.g. future loss of contracts/staff availability?
What changes is your business making in the short and longer term to help drive business performance back to either pre virus levels or beyond?
If you have employees who would otherwise be laid off during this crisis, you may want to take advantage of the Coronavirus Job retention scheme. As yet there is no detailed guidance published on this – hopefully it will come out very soon. We have understandably received a large number of enquiries about how this might work and so this email is designed as an overview of what we know now, and some interpretation which I have gleaned from other professionals. I hope this helps you. Also attached is some suggested wording for an agreement for an affected employee.
Download our Business Risk and Financial Planning for COVID-19 document below:Business Risk and Financial Planning for COVID-19
Download our SMALL BUSINESS EMERGENCY ACTION PLAN below:SMALL BUSINESS EMERGENCY ACTION PLAN
Last night the Chancellor stood in 10 Downing Street and announced some new support for small businesses.
At this point in time, we still do not understand the detail of the various measures that have been announced – rest assured we will update you as soon as things become clearer.
They can be summarised as…
Coronavirus Job Retention Scheme
HMRC will reimburse 80% of furloughed (basically another word for redundant) workers wage costs, up to a cap of £2,500 per person per month. HMRC are working urgently to set up a system for reimbursement as currently their systems are not able to facilitate payments to employers.
Under the new Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis. The scheme, open to any employer in the country, will cover the cost of wages backdated to 1 March 2020 and will be open before the end of April. It will continue for at least three months, and can include workers who were in employment on 28 February.
To claim under the scheme employers will need to:
- designate affected employees as ‘furloughed workers’, and notify employees of this change. Changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation; and
- submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC will set out further details on the information required.
- HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
While HMRC is working urgently to set up a system for reimbursement, we understand existing systems are not set up to facilitate payments to employers. Business that need short-term cash flow support, may benefit from the VAT deferral announced below and may also be eligible to apply for a Coronavirus Business Interruption Loan
VAT and Income Tax Deferral
The next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments until the end of June 2020. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.
The deferral applies automatically and businesses do not need to apply for it. VAT refunds and reclaims will be paid by the government as normal.
If you want to take advantage of this then we suggest you should also cancel your DD for HMRC VAT via your online banking
Income Tax payments
The self-assessment tax payment you should be making on 31 July 2020 has been deferred until 31 January 2021.
To reiterate these are deferrals not write offs, so both the tax and the VAT will still be payable.
This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.
The Time to Pay helpline has fallen over a number of times this week and has been unable to cope, so this relief is something that was already happening in practice anyway.
HMRC Time to pay
HMRC’s Time to Pay scheme can enable firms and individuals in temporary financial distress as a result of Covid-19 to delay payment of outstanding tax liabilities. HMRC’s dedicated Covid-19 helpline provides practical help and advice on 0800 0159 559. The helpline has been difficult to access so the VAT and the self assessment deferment schemes are automatic and you do NOT need to apply for them.
Support for businesses through the Coronavirus Business Interruption Loan Scheme
The interest free period on loans under this scheme was extended from 6 to 12 months.
As far as we can see all the rest of the reliefs have stayed the same.
You can get full details of everything that is currently available to small businesses (basically loads of loans!) here…
Liric Coronavirus Catch-Up
I am going to attempt an online meeting to answer any questions you have about how this may affect your business. I will provide further details of this as soon as I can.
We will email separately with some practical advice to help you in this difficult time, but one thing we would say is to try and not worry about what has not yet happened. We are here to help and support you.
And a final word……Stay safe. Do what you can with what you have. Control what’s in your control. Help as many people as you can through this period with any spare resources you have, whether that’s time, money or love. This will not last forever, nor for very long and we will get through this… together… and be stronger at the other side.
Dont forget to join our WhatsApp group for latest updates and discussion https://chat.whatsapp.com/EJhUepkQqm20pckeERxsG1
Lisa and the Liric Team