The Coronavirus Job Retention Scheme – some guidance

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HMRC has now issued its guidance on how the Coronavirus Job Retention Scheme will work. It expects the scheme, designed to support employers whose operations have been severely affected by coronavirus, to be up and running by the end of April.

It says employers can use a portal to claim for 80 per cent of furloughed employees’ (employees on a leave of absence) usual monthly wage costs, up to £2,500 a month.

They can also claim the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.

The scheme is open to all UK employers that had created and started a PAYE payroll scheme on February 28, 2020.

Any organisation with employees can apply. As well as businesses, that includes charities, public authorities and recruitment agencies.

Employees you can claim for

Furloughed employees must have been on the PAYE payroll on February 28, 2020 and can be on any type of contract, including:
• full-time employees
• part-time employees
• employees on agency contracts
• employees on flexible or zero-hour contracts

The scheme also covers employees who were made redundant since February 28 2020, if they are rehired by their employer. Employees hired after that date cannot be furloughed or claimed for.

To be eligible for the subsidy, when on furlough an employee can not undertake work for, or on behalf of, the organisation. This includes providing services or generating revenue.

While on furlough, the employee’s wage will be subject to usual income tax and other deductions.

If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme.

HMRC says employers should discuss with their staff and make any changes to the employment contract by agreement.

They may need to seek legal advice on the process and if sufficient numbers of staff are involved, it says it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.

When employers are making decisions in relation to the process, including deciding who to offer furlough to, equality and discrimination laws will apply in the usual way.

To be eligible for the subsidy, employers should write to their employee confirming that they have been furloughed and keep a record of this communication. Businesses do not need to place all their employees on furlough.

Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after the February 28 date.

Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this. Those who are shielding in line with public health guidance can be placed on furlough.

If an employee has more than one employer they can be furloughed for each job. Each job is separate, and the cap applies to each employer individually.

What you can claim

Employers need to make a claim for wage costs through the scheme. Fees, commission and bonuses should not be included.

At a minimum, employers must pay their employee the lower of 80 per cent of their regular wage or £2,500 per month.

An employer can also choose to top up an employee’s salary beyond this but is not obliged to do so.

HMRC plans to issue more guidance on how employers should calculate their claims for Employer National Insurance Contributions and minimum automatic enrolment employer pension contributions, before the scheme becomes live.

Employees whose pay varies

If the employee has been employed or engaged by an employment business for a full 12 months prior to the claim, businesses 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, they can claim for an average of their monthly earnings since they started work.

If they only started in February 2020, employers can use a pro-rata for their earnings so far to claim.

To claim, you will need:

• your ePAYE reference number
• the number of employees being furloughed
• the claim period (start and end date)
• the amount claimed (per the minimum length of furloughing of 3 weeks)
• your bank account number and sort code
• your contact name
• your phone number

You will need to calculate the amount you are claiming. HMRC will retain the right to retrospectively audit all aspects of the claim.

Employers can only submit one claim at least every three weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until March 1 if applicable.

Once HMRC has received your claim and you are eligible for the grant, it will pay it via BACS payment to a UK bank account.

You should make your claim in accordance with actual payroll amounts at the point at which you run your payroll or in advance of an imminent payroll.

Employers must pay the employee all the grant they receive for their gross pay, no fees can be charged from the money that is granted.

Employees that have been furloughed have the same rights as they did previously. That includes Statutory Sick Pay entitlement, maternity rights, other parental rights, rights against unfair dismissal and to redundancy payments.

Once the scheme has been closed by the government, HMRC will continue to process remaining claims before terminating the scheme.

Wages of furloughed employees will be subject to Income Tax and National Insurance as usual. Employees will also pay automatic enrolment contributions on qualifying earnings, unless they have chosen to opt-out or to cease saving into a workplace pension scheme.

Employers will be liable to pay Employer National Insurance contributions on wages paid, as well as automatic enrolment contributions on qualifying earnings unless an employee has opted out or has ceased saving into a workplace pension scheme.

Tax Treatment of the Coronavirus Job Retention Grant

Payments received by a business under the scheme are made to offset these deductible revenue costs.

That means they must be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.

Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

For more details visit: www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

Support for the self-employed

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The government has announced a new Self-Employed Income Support Scheme to support those who work for themselves as they struggle to cope with impact of the coronavirus crisis.

Unveiling the plan, Chancellor Rishi Sunak said that self-employed people facing financial difficulties would receive a taxable grant based on their previous earnings over the last three years.

It will be worth up to 80 per cent of earnings and it will be capped at £2,500 a month.

The figure will be calculated using average monthly profits over the last three financial years. Support will initially last three months. However, it may be June before people can access the money.

Mr Sunak said that the scheme would only be open to those who are already self-employed and have a self-assessment tax return for 2019. It will apply to those with trading profits up to £50,000 a year.

The government says that 95 per cent of people who are majority self-employed will benefit from the support scheme and he hopes people will be able to access it no later than June. The scheme will be backdated.

The money will be paid in a single lump sum and anyone who missed the January deadline for their tax return will get an extra four weeks to submit.

Self-employed people who are eligible for the new scheme will be able to apply directly to HMRC for the taxable grant, using an online form, with the cash being paid directly into people’s bank account.

To minimise fraud, only those who are already in self-employment and meet the above conditions will be eligible to apply. HMRC will identify eligible taxpayers and contact them directly with guidance on how to apply.

The Chancellor described the scheme as an “unprecedented level of support” and said ministers had worked to ensure it was targeted at those who need it the most.

Unveiling the scheme, he said he was treating the self-employed like the employed and told them: “You have not been forgotten” and he added: “We are all in it together”.

However, he also implied that he was looking to reform the tax system in the future.

He told a press conference announcing the scheme there was “currently an inconsistency” between what the employed and self-employed pay, despite the actions taken “treating them the same”.

Asked about the self-employed and freelancers who don’t have three years’ worth of accounts, Mr Sunak said the Treasury would look at what they do have.

However, those who are recently self-employed and do not have a full year of accounts will not receive any help under this scheme.

Full details of the Self-Employed Income Support Scheme will be announced by the government later.

Other support measures aimed to help the self-employed include changes to sick pay, aimed at giving assistance to sole traders. The Minimum Income Floor in Universal Credit is being suspended ‘for everyone affected by the economic impacts of coronavirus’.

The move means that self-employed people can now access Universal Credit at a rate equivalent to Statutory Sick Pay for employees – approximately £95 a week.

The ‘new style’ Employment and Support Allowance will be payable for people directly affected by COVID-19 or self-isolating according to government advice from the first day of sickness, rather than the eighth day.

People will also be able to claim Universal Credit and access advance payments where they are directly affected by COVID-19 or self-isolating, without the current requirement to attend a Jobcentre.

The Chancellor announced last week that the government would cover 80 per cent of at-risk employees’ salaries for three months, as part of a raft of measures aimed at supporting the economy during the crisis.

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of the salary of employees that would otherwise have been laid off.

The scheme will cover 80 per cent of a regular salary up to £2,500 a month, which is just above the median income. All UK businesses are eligible.

To discuss any issues that you are facing as a result of coronavirus and how you can access support please contact WNJ on 01772 430000. We are here for you.

Filing accounts – a three-month extension

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Businesses are being given an additional three months to file their accounts as they work to deal with the impact of COVID-19.

The joint initiative between the government and Companies House will mean businesses can prioritise managing the impact of the crisis and it will also help them avoid penalties.

There are approximately 4.3 million businesses on the Companies House register and they must submit their accounts and reports each year.

Under normal circumstances, companies that file accounts late are issued with an automatic penalty.

However, as part of the agreed measures, while companies will still have to apply for the three-month extension to be granted, those citing issues around COVID-19 will be automatically and immediately granted an extension.

Applications can be made through a fast-tracked online system which the government says will take just 15 minutes to complete.

Full guidance on applying for an extension can be found at:

https://www.gov.uk/guidance/apply-for-more-time-to-file-your-companys-accounts

Companies that have already extended their filing deadline, or shortened their accounting reference period may be ineligible for an extension.

The government says the policy will be kept under review and “amended as necessary” in light of the progress of the COVID-19 pandemic.

Companies House chief executive Louise Smyth said: “We recognise that these are uncertain times for businesses and that’s why we’re doing all we can to help.

“By easing the burden, we can help businesses through this period and enable them to thrive in the future. I would encourage companies who believe they would benefit from this new flexibility to make an application in good time.”

The government is also in close consultation with company representative bodies, legal practitioners and others, to look at solutions for the impact COVID-19 may have on companies’ ability to hold Annual General Meetings. And it says that updated guidance on this matter will be published in due course.

To discuss this filing extension and any issues that you are facing as a result of coronavirus and how you can access support please contact WNJ on 01772 430000.

VAT deferral – an update

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Businesses and sole traders that make VAT payments to the HMRC by direct debit are being advised to cancel the arrangement to ensure they take advantage of the government’s deferral scheme.

The government is looking to support the economy during the coronavirus pandemic by deferring payments from March 20 until June 30.

VAT-registered businesses and individuals will not need to make a payment during this period and this is an automatic offer with no applications required.

Cancelling any direct debit will ensure that payments aren’t automatically processed. However, they will also need to remember to set up the direct debit for future VAT returns.

And they should also continue to prepare their VAT returns as normal and submit them on time.

VAT-registered businesses and individuals will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period.

VAT refunds and reclaims will be paid by the government as normal.

For more information about the government’s support for business during the coronavirus crisis visit: www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

To discuss any issues that you are facing as a result of coronavirus and how you can access support please contact WNJ on 01772 430000. We are here for you.

Taxation support

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Deferring VAT and Income Tax payments

Chancellor Rishi Sunak has announced the next quarter of VAT payments will be deferred until the end of June – a move he says will inject £30bn into UK businesses during the coronavirus crisis.

Making the announcement the Chancellor declared that the package aimed: “To help businesses pay people and keep them in work.”

The VAT deferral will apply from March 20 until June 30. Businesses will not need to make a payment during this period.

VAT-registered businesses and individuals will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period.

VAT refunds and reclaims will be paid by the government as normal.

If you are self-employed, Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021. No penalties or interest for late payment will be charged in this period.

‘Time to Pay’ Scheme

HMRC has a set up a dedicated phone helpline to support businesses and self-employed people concerned about not being able to pay their tax bill due to coronavirus.

The government has also announced that during the outbreak the usual 3.5 per cent annual interest on deferred tax payments will be waived.

It is among a package of measures introduced in a bid to support businesses struggling to cope with the impact of the pandemic.

HMRC says the new hotline is a way for any business or self-employed individual concerned about paying their tax as a result of the crisis to get practical help and advice.

HMRC has drafted in up to 2,000 “experienced call handlers” who it says are available to support businesses and individuals when needed.

For those who are unable to pay their bill due to coronavirus, the taxman will discuss their specific circumstances to explore:

• Agreeing an instalment arrangement
• Suspending debt collection proceedings
• Cancelling penalties and interest where there are administrative difficulties contacting or paying HMRC immediately

HMRC says that each case will be negotiated on an individual basis, with bespoke Time to Pay arrangements. The helpline number is 0800 0159 559.

It is critically important that businesses that are facing these difficulties address the situation as soon as they can.

In most case, when it comes to Time to Pay the business involved will need to put its repayment offer in writing and produce information on its cash flow. Getting that negotiation right is also important.

Support for Sole Traders

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A number of initiatives have been introduced to support sole traders through these tough times – though pressure is growing on ministers to do more to help the self-employed. Further announcements are expected later today.

Pleas are growing for the government to give more financial assistance to freelancers, contractors and sole traders, whose businesses have been massively hit by the COVID-19 crisis.

What has been done so far? The deferral of VAT and Income Tax payments and grant funding covered elsewhere in this newsletter may be of help.

There are also changes to sick pay, aimed at giving assistance to sole traders. The Minimum Income Floor in Universal Credit is being suspended ‘for everyone affected by the economic impacts of coronavirus’.

The move means that self-employed people can now access Universal Credit at a rate equivalent to Statutory Sick Pay for employees – approximately £95 a week.

The ‘new style’ Employment and Support Allowance will be payable for people directly affected by COVID-19 or self-isolating according to government advice from the first day of sickness, rather than the eighth day.

People will also be able to claim Universal Credit and access advance payments where they are directly affected by COVID-19 or self-isolating, without the current requirement to attend a Jobcentre.

Mortgage lenders have agreed they will support customers that are experiencing issues with their finances as a result of Covid-19, including through payment holidays of up to three months.

This will give people the necessary time to recover and ensure they do not have to pay a penny towards their mortgage in the interim.

It has also been announced that the proposed rollout of IR35 to the private sector in April has been postponed for one year as a result of COVID-19.

It is a delay that will be welcomed in most quarters. Even before the current situation there had been calls for the measures to be put on hold ( https://wnj.co.uk/ir35-delay/)

Coronavirus – your guide to available support

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A massive £350bn package of government support to help businesses survive the impact of the coronavirus pandemic has been unveiled as the crisis deepens. But what does it mean for your business – what help is out there for you?

To try and make things clearer, we’ve produced this guide to some of the unprecedented initiatives that the government has unveiled as it battles to shore up the economy and protect the future of businesses and jobs in all sectors.

Please get in touch with WNJ – we are here to help and support you as you face whatever problems and challenges this crisis brings.

We can advise on what financial support is out there and how to access it quickly and we will work with you throughout the crisis to help you navigate your business through these difficult times.

To discuss any issues that you are facing as a result of coronavirus and how you can access support please contact WNJ on 01772 430000. We are here for you.

Grant and Loan Support

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The Coronavirus Business Interruption Loan Scheme – offering loans of up to £5million for SMEs through the British Business Bank – is launching this week.

The aim is to support the continued provision of finance to the UK’s small and medium sized businesses during the Covid-19 outbreak.

The government says it will provide a guarantee of 80 per cent on each loan – subject to a per-lender cap on claims – to give lenders further confidence in continuing to provide finance to SMEs.

In addition, the government has announced that it will not charge businesses or banks for this guarantee, which will potentially enable a ‘no’ credit decision from a lender to become a ‘yes’.

Businesses can access the first 12 months of the finance interest free, as government will cover the first 12 months of interest payments. The business remains liable for repayments of the capital.

You are eligible for the scheme if your business is UK-based, with turnover of no more than £45m per year and meets the other British Business Bank eligibility criteria.

The full rules of the scheme and a list of accredited lenders is available on the British Business Bank website (www.british-business-bank.co.uk).

All the major banks will offer the scheme once it has launched. There are 40 accredited providers in all.

You should talk to your bank or finance provider – not the British Business Bank – as soon as possible and discuss your business plan with them.

This will help your finance provider to act quickly. If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.

Retail, hospitality and leisure businesses

The Retail and Hospitality Grant Scheme will provide businesses in these sectors with a cash grant of up to £25,000 per property.

Businesses with a rateable value of under £15,000 will receive a grant of £10,000. Those with a rateable value of between £15,001 and £51,000 will receive £25,000.

The aim is to support retail, hospitality and leisure businesses hit by the crisis. Properties eligible range from cafes and shops to cinemas, hotels and self-catering holiday accommodation.

Businesses don’t need to do anything to access the scheme. Local councils will write to them if they are eligible.

Other measures being introduced include:

• Small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs. Your local authority will write to businesses if they are eligible

• A new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans

Support for Employers

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Coronavirus Job Retention Scheme

Chancellor Rishi Sunak has appealed to employers to “stand behind” their workers during the coronavirus crisis – and has backed that call with help for them to pay the salaries of staff.

Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of the salary of employees that would otherwise have been laid off.

The scheme will cover 80 per cent of a regular salary up to £2,500 a month, which is just above the median income. All UK businesses are eligible.

To access the scheme, you will need to:

• designate affected employees as ‘furloughed workers,’ and notify your 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
• submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. The HMRC says it will set out further details on the information required

The taxman is also “working urgently” to set up a system for reimbursement as its existing systems are not set up to facilitate payments to employers.

Employers can top up salaries further if they choose to. Detailed guidance is on its way and will make things clearer.

Statutory Sick Pay relief package for SMEs

The government is bringing forward legislation to allow SME businesses and employers to reclaim Statutory Sick Pay (SSP) for absence caused by COVID-19.

The refund will cover up to two weeks’ SSP per eligible employee who has been off work because of coronavirus.

The package is for employers with fewer than 250 staff – the size of an employer will be determined by the number of people they employed as of February 28 this year.

A rebate scheme is being developed. Further details will be provided once the legalisation has passed.

Employers will be able to reclaim expenditure for any employee who has claimed SSP, according to the new eligibility criteria, as a result of COVID-19

They should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note.

If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website.

The eligible period for the scheme will start the day after regulations on the extension of SSP to those staying at home comes into force.

The government has said that it will work with employers over the coming months to set up the repayment mechanism as soon as possible.

WNJ and the coronavirus situation

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The impact of the Coronavirus (COVID-19) pandemic is already being felt in businesses of all sizes and in all sectors of the economy. It is of obvious concern to WNJ’s clients and colleagues.

We would like to assure everyone that the health and safety of our clients and staff remains our top priority.

We are taking appropriate actions to help keep our workplace healthy, while maintaining our high levels of customer service.

And we have the necessary procedures in place to ensure that we adhere to the latest guidelines, which we continue to monitor closely.

Our partners and colleagues are currently maintaining their usual work patterns.

However, we have a robust and tested IT infrastructure and plans in place so that our team are able to work remotely from their homes, with minimal interruption to our ability as a business to provide support to our clients.

We have already taken practical steps such as reducing face-to-face meetings.

The government has indicated it could take up the three months for the COVID-19 epidemic to reach its peak in the UK.

We are continuously monitoring the official information and we have contingency plans in place if matters escalate, so that we can continue to service our clients and reduce the impact on our business.

And we will keep you fully informed of any changes we are making to our processes and way of working.

These are challenging times and we are here to help you minimise the impact of the situation on your business.

Please contact me on me on 01772 430000 to discuss any concerns you may be having.