JOB RETENTION SCHEME FURLOUGHING OF EMPLOYEES
Since Rishi Sunak's announcement of the Job Retention Scheme with grants for companies furloughing staff during this period of uncertainty, there have been several additional details and notes released that you should be aware of:
- A standalone portal for reclaiming furlough grants is expected to be introduced around 21st April, to allow furlough grants to be reclaimed. The professional accountancy bodies have requested that tax agents be given access to this portal as well as employers.
- Employers will be able to use the portal to claim for 80% of furloughed employees' usual monthly wage costs, up to £2,500 per month. Fees, commissions and bonuses are not included.
- Payments to the employee should be made via the PAYE system and will be subject to deductions for income tax and employee's NICs.
- Employers can also claim associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions in addition to the monthly wage costs.
- An employee can be furloughed for a minimum of three weeks at a time and for a maximum of three months from 1 March, although the government might extend the scheme. The individual could remain furloughed even if the Coronavirus Job Retention Scheme is not extended, but then the employer would not have any grant funding to cover their wages.
- Employees whose pay varies: If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:
- the same month’s earning from the previous year
- average monthly earnings from the 2019-20 tax year
- If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work. If the employee only started in February 2020, use a pro-rata for their earnings so far to claim. Once you’ve worked out how much of an employee’s salary you can claim for, you must then work out the amount of Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions you are entitled to claim.
- Full time and part time salaried employees: The employee’s actual salary before tax, as of 28 February should be used to calculate the 80%.
- There is nothing to prevent employers rotating furlough leave amongst the workforce, providing the minimum period of three weeks' leave requirement is adhered to. Employers can only submit one claim every three weeks which can be backdated to 1st March 2020.
- Employers must note that normal employment law applies when seeking to furlough employees. Where necessary, a matrix should be created, using fair, consistent and non-discriminatory criteria for choosing which employees will be furloughed.
- Directors can furlough themselves whilst continuing to undertake their
- The grant income received must be included as income in the business’s calculation of its taxable profits but employment costs can be deducted as normal when calculating the businesses' taxable profits.
- The company bank account will need to be a UK account and as a bulk amount will be claimed for a group of employees you will need to consider how this will be reconciled once it is paid.
- HMRC will reserve the right to investigate claims and cross-reference them to RTI data.
Full details can be found here for the Job Retention Scheme. We have issued Furlough letter templates to our clients that have requested them. Please contact us if you would like a copy, however we must state that they are examples only, and you should confirm with your legal team and / or HR advisor before using them. Please email our support team Sharon or Jo on firstname.lastname@example.org or email@example.com, or call 0161 905 1801. Please click the link below for the Government guidance on the Job Retention Scheme.
CARRYING OVER OF ANNUAL LEAVE
In a Government press release last Friday, Business Secretary, Alok Sharma, announced that employees that are unable to use annual leave due to the Coronavirus outbreal, will be able to carry over up tp 4 weeks' leave into the next two years.
GOVERNMENT BUSINESS TOOLKIT
The UK Government has launched a campaign to help businesses deal with the unprecedented challenges as a result of the Covid-19 outbreak. Please click below to access the business toolkit to assist businesses with their communications to stakeholders etc.
Since last Thursday's announcement from the Chancellor specifically aimed at self employed workers, a link has been issued that can now be used to claim support, however as stated, funds won't be availble until 1st June at the earliest.
BANK LOANS & BUSINESS INTERRUPTION LOAN SCHEME
The Bank of England has cut interest rates to 0.1%, and banks have announced they will be relaxing requirements for overdraft extensions and loans applications. Whilst the UK is on lockdown, banks remain open, so, if you need to apply for a loan, please speak to your local branch or business bank manager.
Did you know that the Business Interruption Loan Scheme is available for self-employed workers as well? As long as you have a business bank account, an annual turnover of up to £45m and generate more than 50% of your turnover from trading activity you can apply under the scheme. There are some restrictions in place - please click the link below to find out more.
Please click below for our detailed list of all the different funding and support available from the Government.
At LWA, we are assisting clients with cash flow forecasts for loan funding. For clients on Xero we can use Futrli to speed up the process from days into hours. If you would like cash flow forecasting support to assist your loan applications, please contact firstname.lastname@example.org or call 0161 905 1801.
GRANTS FOR BUSINESSES THAT PAY LITTLE OR NO BUSINESS RATES
If you occupy property in England and already qualify for Small Business Rate Relief or Rural Rate Relief you will benefit from a new Small Business Grant Scheme providing funding of up to £10k. This will be made available via local councils for small businesses and if you are eligible, your local council will contact you in due course.
If you're a business based in Trafford borough and were in receipt of SmallBusiness Rate Relief last year, you are entitled to the £10k Covid-19 grant. The council has launched a portal for businesses eligible for the £10k (or £25k for retail, hospitality & leisure sector - see next section) emergency grants. Please click below.
The Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
On 25th March the guidance notes to local councils for support relief was expanded to detail the types of business that would benefit, including estate agents, charity shops and garden centres.
Businesses in these sectors with a property that has a rateable value of up to £15,000 may be eligible for a grant of £10,000.
Businesses in these sectors with a property that has a rateable value of over £15,000 and less than £51,000 may be eligible for a grant of £25,000.
DEFERRED VAT PAYMENTS
The deferral for VAT payments applies from 20 March 2020 until 30 June 2020 and all UK businesses are eligible. Generally this will mean the deferral of one quarter’s VAT: the payment due on 7 April, 7 May or 7 June 2020 or the monthly payments due on each of these dates. This is an automatic offer and no application is required and so businesses will not need to make a VAT payment during this period.
HMRC has confirmed that businesses will need to cancel their direct debits. Therefore businesses that have a direct debit mandate in place to pay their VAT and wish to defer payment will need to contact their bank to cancel that mandate.
Taxpayers will then have until 31 March 2021 to pay any liabilities that accumulate during the deferral period and will need to make arrangements to pay this accumulated VAT. VAT refunds and reclaims will be paid by HMRC as normal and there are no concessions relating to the filing of VAT returns.
Returns should still be filed on time.
If you wish to defer your VAT payment, you must cancel your VAT Direct Debit as HMRC will just take it automatically
INCOME TAX SELF ASSESSMENT PAYMENTS
For Income Tax Self-Assessment, payments due on the 31 July 2020 may be deferred until 31 January 2021.
You are eligible if you are due to pay your second self-assessment payment on account on 31 July. You do not need to be self-employed to be eligible for the deferment. The deferment is optional. If you are still able to pay your second payment on account on 31 July you should do so.
How to access the scheme
This is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment until January 2021.
HMRC have also scaled up their Time to Pay offer to all firms and individuals who are in temporary financial distress as a result of COVID-19 and have outstanding tax liabilities.
HMRC has a set up a telephone helpline on 0800 0159 559 to support businesses and self-employed people concerned about not being able to pay their tax due to Coronavirus. HMRC will discuss your specific circumstances to explore agreeing an instalment arrangement; suspending debt collection proceedings; cancelling penalties and interest where you have administrative difficulties contacting or paying HMRC immediately.
WE'RE STILL HERE TO HELP
We will continue to keep you updated on any additional government guidance and notes issued that we are made aware of. If you have any specific concerns, please feel free to contact a member of our team on 0161 905 1801 in Manchester, or 01925 830 830 in Warrington.
You can access all our previous updates on our website, and please feel free to share this email with anyone that you feel might benefit.
According to the latest figures released, the effects of Covid-19 on peoples lives and their families is going to get worse before it gets better - our thoughts are with those that have suffered the loss of loved ones, as we focus on keeping our staff and families safe. Wishing you and your family all the very best at this unprecedented time.