Further to our blog post last week please find below an updated version which takes into account the latest situation in respect of the areas covered.
Many of you know Ken, our tax manager (firstname.lastname@example.org), and he is working alongside the Partners and Consultants at this time to help answer any questions you have in respect of the issues raised in this attachment.
We remain fully contactable so please do not hesitate to get in touch.
Government advice for businesses and employers
Following our previous email, further measures have been announced to support UK businesses financially and the situation is constantly evolving.
The main measures announced to date include the following:-
- Amended legislation relating the Sick Pay rules
- Business rates holiday and grants, updated to include nursery businesses.
- Coronavirus Job Retention Scheme
- Deferral of Self-Assessment tax payments
- Deferral of VAT payments.
- Changes to the Coronavirus Business Interruption Loan Scheme
- Changes to universal credit and working tax credit.
- Companies House – Annual accounts
- Self employed
- Employees who follow advice to stay at home and who cannot work as a result are entitled to SSP (even if they are not sick themselves). Medical evidence is not needed for the first 7 days, after which time employers may use their discretion as to the evidence they require if the employee is remaining at home. Employers are being strongly encouraged to use their discretion at this time.
- If an employee needs time off to care for someone, they are entitled to take such time off, if they are caring for a child or dependant. There is no statutory right to pay for this absence, but employers may offer pay depending on contracts or workplace policy.
- Sick pay is payable from Day 1 as the three-day waiting period has been removed.
- Those not eligible for sick pay including those earning less than £118 per week or self-employed are able to claim Universal Credit and other State benefits may become available.What can be claimed ? – an SSP refund will be payable and will cover up to two weeks SSP for each eligible employee.
How to claim refund of SSP paid ? – the repayment mechanism will be set up in the coming months – please therefore be aware that the refund is not immediately available to employers.
- If you operate in the retail, hospitality or leisure sectors (all businesses) there will be a rates holiday for 2020/21. This holiday has now been extended to include nursery businesses providing OfSted Early Years Register and Early Years Foundation Stage services.
- If you operate in the retail, hospitality or leisure sectors (small businesses operating from premises with a rateable value between £15,000 and £51,000) a grant of £25,000 will be provided. This is intended to help with the cost of business disruption and payment of rent.
- If you are already receiving Small Business Rate Relief (rateable value less than £15,000 – all businesses) a grant of £10,000 will be provided.How to claim the rates holiday/grants ? – local authorities will be dealing with this automatically from 20th March 2020 and will contact you directly.
Job Retention Scheme (CJRS)
- The scheme is open to all employers, with some eligibility criteria.
- The employer must designate staff who are not working as ‘furloughed workers’, and notify the employees concerned of this change.
‘Furloughed’ means an employee who is redundant due to no work being available but is to remain employed.
- If` an individual has been subject to PAYE then they can furloughed, this means that directors may, and casual workers should, be able to be furloughed.
- An employee needs to be entirely non-active to qualify.
- The scheme will be backdated to commence from 1 March 2020. It can therefore apply to workers who were in employment at 28 February 2020.
It is only effective when the employee has completely stopped working, so it does not apply to those on reduced hours.
For zero hours employees – employers will be required to use an average of the hours worked to calculate the amount of salary available.
- The grant will pay 80% of the wage costs of furloughed workers up to a maximum of £2,500 per worker per month.
For the employer – “wage costs” will be the total of the employees’ wages plus employer’s NIC and the legal minimum pension contributions.
For the employee – “wages” will be calculated by referring to a previous pay period. This period has yet to be determined. There will be PAYE and NIC on the payment as normal.
- The employer can choose to fund the difference between the scheme payment and the full salary, but they do not have to do so.
- The scheme will run at least until the end of May 2020.
- The Scheme is a grant which will be reimbursed to the employer, this means that the employer will need to make the salary payments to their furloughed employees and then be reimbursed by HMRC. See CBILS for the possibility to obtain funding to help with this in the interim.
How to claim the grant ?
the employer will need apply to HMRC for the grant.
A new online portal will be provided for employers submit information about their furloughed employees.
The scheme will not be up and running until the end of April.
There are understandably many unanswered questions which we await clarity on, such as :-
- How the scheme applies to directors, given that a director needs to manage a business in some way it is likely that they can be deemed inactive and therefore may fail the requirements to qualify;
- Whether a furloughed employee can return to work and then subsequently be furloughed again;
- As the grant will be based on a previous pay period is it thought unlikely that increasing employee wages now will have an impact on what they will be paid under the Scheme
Self-assessment tax payments to HMRC
- There is an automatic offer to defer 2nd Payments on Account (due 31st July 2020) until 31st January 2021.
VAT payments to HMRC
- There is an automatic offer to defer VAT payments which are due between 20th March and 30th June 2020.
- The payments are effectively deferred and the taxpayer has until the end of the 2020/21 tax year to settle the liabilities that were due in that period.
Business Interruption Loan Scheme (CBILS)
- All small and medium sized businesses (turnover less than £41m) will be able to apply, but there are eligibility criteria.
- The Scheme is being administered by the British Business Bank and loan facilities will range from £1,000 to £5m with repayment terms between three months and six years for loans and up to three years for overdrafts and invoice facilities.
- The Government will guarantee 80% of the loan. The borrower remains 100% liable for the debt. There is no fee for smaller businesses.
- At the discretion of the lender, facilities up to £250,000 may be unsecured. A principal private residence cannot be used as security.
- The first twelve months of the loan will be interest free.
- If the lender can offer finance on normal commercial terms without the need for the Scheme they will do so.
How to apply for the Scheme ? – the Scheme was expected to be available from the 23rd March and the accredited lenders began to enable applications on their websites from the 24th March 2020.
Whilst the BBB is administering the Scheme applications should be made directly to the individual lenders
Guidelines are, that in the first instance, businesses should approach their own current lender/banker website
A full list of the lenders can be found here https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/current-accredited-lenders-and-partners/
Universal Credit and Working Tax Credit
- Universal credit and working tax credit are to be increased by £20 per week for 12 months.
- Self-employed people will now be able to access full universal credit at a rate equal to Statutory Sick Pay.
Filings with Companies House
- It is now possible to extend a Company’s filing deadline for accounts by 3 months.
- An application can only be made once and if the extended deadline is missed the usual penalties will apply.How to apply for the extension ? – please speak to us if this is something you want to consider and we will make the application for you.
- Should you have pandemic or Government ordered enclosure insurance then you should now be able to make a claim. However, please check your policy thoroughly as some list specific infectious diseases and some require enforced closure and infectious diseases cover for the claim to be valid.
- The first announcement has just been made today with first indications as follows:-
- A self-employed income support scheme has been created.
- Open to self employed people with business profits up to £50,000 pa.
- It will be a taxable grant from the Government based on 80% of average monthly profits over the last 3 years.
- Maximum of £2,500 per month.
- Available for 3 months (may be extended if necessary).
- HMRC working on setting up the scheme and it should be available no later than the beginning of June, backdated to 1st
- If you are eligible HMRC will contact taxpayers directly and ask them fill out an online form. They will then pay the grant directly into the taxpayer’s bank account.