COVID-19 UPDATES

Last Updated: 2nd April 2020 at 10am

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We are still awaiting further guidance from HMRC regarding whether Directors can be furloughed and reclaim 80% of their salary through the coronavirus job retention scheme:

 

·        COVID-19: support for businesses

·        COVID-19: guidance for employees

 

There is therefore no official guidance that we can provide you and is soon as this is published we will advise all of clients. 

Self-employment Income Support Scheme (SEISS)

The government has introduced the Self-employment Income Support Scheme (SEISS) to support self-employed individuals (including members of partnerships).

 

This is very welcome news for most of the self-employed but high earners (over £50,000) and the new self-employed (since April 2019) will be left empty handed.

 

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

 

Who can claim?

Anyone with average self-employed income over the past 3 tax years (to 5th April 2019) of less than £50,000.  This also needs to be your main income and you must has been self-employed in 2018/19.

 

How much can be claimed?

You will get a taxable grant which will be 80% of your average taxable profits for the past 3 years, up to a maximum of £2,500 per month for 3 months:

 

Example

2016/17               £20,000

2017/18               £25,000

2018/19               £30,000

 

Average               £25,000 x 80% = £20,000.

 

Monthly award: £20,000/12 = £1,667

 

What is my taxable income for the past 3 years?

Your Tax Returns for the last three years (if we prepared them) are uploaded to your Iris OpenSpace account if you want to check your income. To log in to your account please click this link https://www.irisopenspace.co.uk/

If you do not use OpenSpace or are having problems logging in please let us know, although it likely that you will need to wait for a reply.

 

How do I claim?

HMRC have advised that they will contact everyone who is eligible for the scheme and invite them to apply online.  We will however advise all clients of the application process as soon as it is published, but no action can be taken yet.

 

When is it paid?

The grant will be paid as a lump sum, but it is not expected to be paid until June.

 

What can I do while I am waiting for the payment or if I am not eligible?

You should be able to receive funding through the Coronavirus Business Interruption Loan Scheme.  Please speak to your bank  and they should be able to arrange an interest-free loan or overdraft to help you through the next few months.

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-through-the-coronavirus-business-interruption-loan-scheme

 

You may be entitled to Universal Credits:

https://www.gov.uk/benefits-calculators

https://www.gov.uk/how-to-claim-universal-credit

 

Or able to claim Employment & Support Allowance:

https://www.gov.uk/guidance/new-style-employment-and-support-allowance

 

Payroll & Furloughed workers
 

To encourage companies not to make staff redundant, HMRC will cover 80% of a worker’s salary while they are furloughed (not working), up to a maximum of £2,500 per month.  This will run for at least 3 months, backdated to 1stMarch 2020. It will be at the discretion of the company if they choose to pay the employee the remaining 20% but the reality in most cases is that they will be unable to do so.

VAT deferral
 

Businesses will not need to pay any VAT from 20th March 2020 to 30th June 2020, and will be given until 5th April 2021 to pay any liabilities. If a VAT refund is due these will still be repaid as usual.

Income Tax deferral
 

The self-assessment payment on accounts due on 31st July 2020 will no longer need to be paid by the self-employed. This will however result in larger balancing payments being required on 31st January 2021.

Self-employed / SSP
 

As self-employed workers cannot claim SSP, temporary measures have been introduced to enable them to claim Universal Credits, at the same rate as SSP for employees. However, this is only £94.25 per week so negligible compared to the amounts claimed by ‘furloughed workers’. For example, a furloughed worker on a salary of £37,500 will be paid £2,500 per month, whereas a self-employed person with annual income (on average) of £37,500 will be only able to claim £408 per month!

If you are able to continue trading and employing staff as normal then nothing will change unless your staff has to self-isolate. In this case you will have to pay them sick pay for the length of time that they are isolated for. 
 

  • If you pay SSP only then the rate you need to pay is £94.25 per week until 6th April when it will increase to £95.85 per week.  Staff are only eligible to receive SSP if they earn over £118 per week.  

  • For illnesses that are coronavirus related there will be no waiting days and SSP is payable from day 1 rather than day 4.

  • If staff are not eligible for SSP then we will give you a SSP1 form to give to your employee.  If you are not sure then send us the staff name and the dates that they have gone sick from and we will check their employee record.  

  • If your contract states that you pay over Statutory Sick Pay (SSP) then please let us know when your staff are off regardless.

  • Employers who had under 250 members of staff as of 28th February 2020 are able to claim 2 weeks SSP per employee from the government for any Coronavirus related illness.  This is for any staff member that have been off sick from 13th March 2020 onwards with a Coronavirus related reason and is eligible for SSP.

  • Directors who are paid over £118 per week (£512 a month or £6,136 a year) are also eligible for SSP and the 2 weeks SSP reclaim. 

  • We are still waiting for guidance on how this will be reclaimed.

The government has released the guidance for the Furlough Workers Scheme (COVID-19) Job Retention Scheme, CJRS.  Below d&t have summarised the key points and how they may affect you.  For the full guidance please see the HMRC website: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme#employees-you-can-claim-for

 

For the company:

  • You must have created and started a PAYE payroll scheme on or before 28th February 2020 and have a UK bank account

  • If you receive public funding for staff costs, and that funding is continuing, then you will not be able to furlough your staff

 

For the employee:

  • They must have been on the PAYE payroll on 28 February 2020

  • They must not undertake any work, if they are working they are not eligible and you will have pay them as normal including if they are on reduced hours or for reduced pay.

  • Must not be on unpaid leave starting prior to 28th February 2020

  • If they are on SSP or self-isolating they cannot be furloughed until they ‘return to work’ and they should receive SSP as normal (if they are eligible)

  • If an employee has more than 1 job then they can be furloughed for each job

  • A furlough employee can take part in volunteer work or training as long as it does not provide services to or generate revenue for, or on behalf of your organisation.  If they are required to complete online training courses whilst they are furloughed then they must be paid at least the minimum wage, even if this is more than the 80% of their wage that is subsidised.

  • If they are on Maternity/Paternity/Adoption/Shared parental pay then this is claimed and paid as normal with their normal rates, if you pay enhanced contractual pay then you can claim the additional amounts through the CJRS

  • Commission, fees and bonuses are not covered by the CJRS

  • The national minimum wage does not apply to furlough payments, they must receive 80% of their normal salary which should be at the Minimum Wage level.

  • For zero hour or variably paid staff it will be the higher of the same month’s earnings from the previous year or the average monthly earnings from the 2019/20 tax year.  If they been employed for less than a year then it will be an average of their monthly earnings.

  • Furlough payments are liable for NI, PAYE and pension contributions (if relevant)

  • An employee must be furloughed for a minimum of 3 weeks

 

What do you have to do?:

  • Discuss with all staff and make any changes to the employment contract by agreement.

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

  • You must write to furloughed employees confirming they have been furloughed and the date that it is from

  • You do not need to place all your employees on furlough

  • Payments received must be included as income in the business accounts, you can deduct the employment costs as normal

 

What will the payment include:

  • The grant will be for 80% of each employees regular Gross wage or £2,500 per month whichever is lower

  • The associated employers NI contribution of the 80% or £2,500

  • Pension – the government will cover the 3% employer pension contribution on qualifying earnings.  If you pay pension on the full pensionable amount you will have to cover the difference

 

How and when to claim:

  • You can submit one claim at least every 3 weeks, claims can be back dated to 1st March

  • 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.

  • You must pay the employee all the grant you receive of their gross pay, no fees can be charged from the money that is granted, you can choose to top up the employee’s salary, but you don’t have to

  • For the claim you will need your employers PAYE reference number; the number of employees being furloughed; the claim period (start and end date); amount claimed (per the minimum length of furloughing of 3 weeks); your bank account number and sort code; your contact name; your phone number.  d&t will be able to help you with making your claims, once we have further information we will send you more details and the charge for this submission.

  • Once HMRC has received your claim they will pay it via BACS payment to a UK bank account

 
 
 
 

Small Business Grants

HMRC have issued updated guidance regarding grants that are available for small businesses that pay business rates:

 

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/877065/small-business-grant-fund-and-retail-guidance-v2.pdf

 

  • Small businesses with a property that has a rateable value of up to £15,000 should be eligible for a grant of £10,000.

  • Eligible businesses (retail, hospitality and leisure)  with a property that has a rateable value of up between £15,001  and £51,000 should be eligible for an additional grant of £15,000, so a total of £25,000.
     

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/875613/Expanded_Retail_Discount_Guidance_25.03.20.doc.pdf

 

This is in addition to the business rates payments ‘holiday’ for 2020/21.

The grants are being dealt with by the local authorities and they will write to you if you are eligible for the grant.  

Any enquiries on eligibility for, or provision of, the reliefs and grants should be directed to the relevant local authority who should be able to advise you.

 

The Coronavirus Business Interruption Loan Scheme (CBILS)

The Coronavirus Business Interruption Loan Scheme (CBILS) has been introduced by the government to provide a line of credit of up to £5m to many businesses that may require additional funding to help see them through this difficult period. It is not a grant. It is a loan with attractive terms and reduced payments for the first 12 months.

CBILS supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance.

 

More detailed information including where to go for this facility is contained in our guide sheet.

 

The budget and COVID-19

The week commencing 16th March 2020, marked a significant increase in precautionary measures being enforced by the UK government in response to COVID-19, which in turn has created wide-spread uncertainty for UK Businesses.

We have been contacted by many of our clients with concerns over the stability of their business amid these measures, which for many will require doors to be closed for an extended period of time. Below we have detailed our tips on the course of action to take to ensure your business is able to weather the storm.

 

The chancellor advised of several drastic measures both within the budget and in the update on 11th March, that the government are taking to ensure that UK businesses are able to continue operation. Here’s a summary of those initiatives:

  • £330bn in loans

  • £20bn in other aid

  • 12 Month Business Rates Holiday

  • Grants:

    • £10,000 for all businesses in receipt of small or rural business rate relief 

    • £25,000 for retail, hospitality and leisure businesses with a rateable property value of £15,000 - £51,000

  • Statutory Sick Pay Relief Package for SMEs

  • HMRC Time to Pay Scheme

“That means any business who needs access to cash to pay their rent, their salaries, suppliers or purchase stock will be able to access a government-backed loan or credit on attractive terms.” – Rishi Sunak – Chancellor

 

How can my bank help me?

The first course of action for any business is to speak to their bank; your bank has an invested interest in you businesses and will be on hand to offer guidance and support where needed. One of the most common mistakes we see from businesses is that when they are in financial difficulty the bank manager is the last person to call.

 

Please click on the links below to see press releases that we have received from some of the banks that we work with, detailing the length to which they are ready to support UK businesses:

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How can the government help me?

As stated above the government has already outlined several initiatives to help UK businesses tackle the potential deficit in capital; although these measures have been promised the budget and on updates since they will not be available for application until April. We have copied a section of their advice page from Gov.uk:

 

A new Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, will enable businesses to apply for a loan of up to £5 million, with the government covering up to 80% of any losses with no fees. Businesses can access the first 6 months of that finance interest free, as government will cover the first 6 months of interest payments.

 

For businesses with fewer than 250 employees, the cost of providing 14 days of Statutory Sick Pay per employee will be refunded by the government in full. This will provide 2 million businesses with up to £2 billion to cover the costs of large-scale sick leave.

 

A dedicated helpline has been set up to help businesses and self-employed individuals in financial distress and with outstanding tax liabilities receive support with their tax affairs. Through this, businesses may be able to agree a bespoke Time to Pay arrangement. If you are concerned about being able to pay your tax due to COVID-19, call HMRC’s dedicated helpline on 0800 0159 559.

 

There will be a £10,000 cash grant to our smallest businesses, delivered by local authorities. Small businesses that pay little or no business rates and are eligible for small business rate relief (SBBR) or rural rate relief will be contacted by their local authority - they do not need to apply. The funding will be provided to local authorities in early April. Guidance for local authorities on the scheme will be provided shortly.

 

Finally, the government is introducing a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.

A £25,000 grant will also be provided to retail, hospitality and leisure businesses operating from smaller premises, with a rateable value between £15,000 and £51,000.

 

Any enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority. Guidance for local authorities on the business rates holiday will be published by 20 March.

 

In addition, the decisions announced by the Bank of England on 11 March 2020 mean that banks are in a better position to provide additional credit to smaller businesses.

 

How can d&t help me?

We have our team working remotely to the same capacity as we would normally, which means that we are still on hand for business support calls and advice where needed; we will be sending out regular advice articles specific to your business and sector, so would advise that you keep a ready eye on your emails and make sure that ours aren’t being directed to junk mail.

 

Below we have attached some advice articles + documents that we have already created in light of recent updates and will be adding to this library over the coming weeks to ensure we are passing over all relevant information.

 

If you have any further questions that we have not covered above, can I please advise that you speak to your Relationship Manager, who will be able to support you with any concern you may have, or point you in the direction of where it can be attained.

 
 
 
 
 
 
 
 
 

Advice articles

 

FAQs

Can a Director furlough themselves?

Yes, provided that they were on a payroll scheme on or before 28th February 2020.

 

Can a Director work while furloughed?

One of the conditions for furloughed employees is that they cannot do any work for the company while furloughed. 

 

It is difficult for a Director to satisfy this condition, particularly if they are the sole Director.   We understand that the rules may be slightly relaxed for Directors and they will be allowed to undertake admin and statutory duties, but exactly what this covers is still unclear.

 

How much can be paid?

HMRC will reimburse 80% of furloughed salary, up to a cap of £2,500 per month..  This covers the salary only, so dividends are not taken into account.

 

As many company Directors pay themselves a basic salary of around £8,628 per annum (£719 per month) the amount that can be claimed in this example would be:

£719 x 80% = £575.20 per month.

 

For directors we are recommending that you still pay the full salary through the payroll.

 

What will this be based on?

This will be based on your salary for 2019/20.

 

Can I increase my salary for 2020/21 to increase the claim?

No, the claim will be based on your salary for 2019/20, but you should still increase your salary through the payroll to the 20/21 Directors Salary of £9,500 per year.

 

How can I claim?

We are still waiting for the CJRS portal and claim information to be released.  As soon as we have more guidance we will let you all know.  If you are furloughing Directors and usually run an Annual payroll you will need to switch the payroll to a quarterly scheme as a minimum as we are expecting HMRC to check grants against the payroll that has been submitted to HMRC. 

 

The charge for a quarterly payroll is £75+vat per quarter, please advise the payroll team on payroll@team-dt.com if you would like to switch payrolls frequency.

Can employees undertake any work for the employer while furloughed?

No, they must be off work completely while furloughed.

 

Is there a specific amount of time that an employee needs to be furloughed?

No, staff can be furloughed for as long as the company needs them to be.

 

How does an employee become furloughed?

The employer will need to designate the affected individual as a furloughed worker and tell them of this change, subject to the normal provisions of employment law.  Crucially the furloughed worker must agree to become a furloughed worker.  This cannot be simply imposed on the individual.

 

The individual cannot insist on becoming a Furloughed Worker, this has to be offered by the employer, although there would be nothing wrong with the employee asking the employer to agree to designate them as a furloughed worker.

 

Can a new employee who has not yet started work become furloughed?

Unfortunately not.  This only applies for those employed on 28th February 2020.

 

Which employees can be furloughed?

Any permanent employees that were employed on 28th February 2020 can be furloughed (subject to the above).

 

We are unsure at this stage if this will cover temporary staff, but do not think it will as they are technically employed by the agency and then contracted out.

 

If an employee is currently off sick and claiming SSP then they can’t be furloughed until they come off SSP and are available for work again.  Therefore the company would be better off furloughing the employee as the government would then cover 80% of their wages and technically there would be no cost to the company.

 

It is unclear at this stage whether directors and shareholders of owner managed companies can put themselves 'on furlough', or how it affects zero hours workers.  We are awaiting further guidance on this but we believe that in many cases it will be difficult to demonstrate that a director has been genuinely furloughed.

 

We are still waiting on further guidance on how it affects zero hours workers but as long as they on the PAYE scheme they should be included we just don’t know the parameters of the payable amount.

 

How much can be paid?

HMRC will reimburse 80% of furloughed wage costs, up to a cap of £2,500 per month, backdated to 1st March 2020.

 

It will be at the discretion of the company if they choose to pay the employee the remaining 20% but the reality in most cases is that they will be unable to do so.

 

We understand the wage costs include Employee’s Tax & NI and pension contributions, although are waiting for guidance about the position regarding Employer’s NI.

 

When will the scheme be formally introduced?

HMRC are still setting up this scheme, we have yet to find out how to access this and how it is claimed. 

 

The payment process is likely to not be in place until the end of April, so if you need support before this date you may be eligible for a Coronavirus Business Interruption Loan (see below).  Full eligibility criteria will be published when the scheme goes live and we will be publishing advice as soon as possible on how to access this scheme so please wait for our correspondence.

 

 

What is available for the self-employed and Directors?

 

Unfortunately, there is currently little support available for business owners (either self-employed or Directors) compared to ‘furloughed workers’. 

 

·        COVID-19: support for businesses

·        COVID-19: guidance for employees

 

However, the government are coming under increasing pressure to introduce greater support for business owners and we are hoping that improved measures will be introduced this week.  It was speculated that these could have been announced yesterday (Monday 23rd) but Boris instead focussed on measures to keep people inside.

 

We are continually monitoring all announcements and will be sending regular updates to our clients, so hope to be able to give you better news in the next few days.

 

The Chancellor did take questions earlier today in the Commons today for the self-employed.  He advised that there are likely to be further measures introduced for the self-employed and they are currently ironing out logistical problems including:

 

·        How much can be claimed? – the latest tax returns are out of date

·        Doesn’t want a fixed amount for everyone

·        Some self-employed people are actually benefiting at the moment!

·        Who is actually furloughed!

 

He said that they are in continuing discussions but they are prioritising pushing through the existing systems first.  Nonetheless, we are hoping that there will an announcement within the next few days.

 

There was nothing said about company directors although we hope that they may be looking into this under the same brush.

 

 

Universal Credits

 

Am I eligible and how do I claim this?

The self-employed who are self-isolating, and unable to work, should be able to claim Universal Credits at the same rate as employees on SSP, £94.25 per week:

 

https://www.gov.uk/guidance/new-style-employment-and-support-allowance

 

 

VAT

 

Does VAT still need to be paid for businesses with a VAT quarter of December 2019 to February 2020?

No, there are no VAT payments that need to be made from 20/3/20 to 30/6/20, and these can be deferred until 5th April 2021.  You can however still choose to make the VAT payments if you are able to do so.

 

Do I still need to charge VAT to my clients during this period and do they need to pay?

Yes, and you still need to prepare VAT Returns as usual.  It is just the payment of the VAT that can be delayed.

 

Do I need to cancel my VAT direct debit?

It is unclear at this stage whether you need to do this or HMRC will simple not collect the payment.

 

 

Corporation Tax

 

Do any of the recent announcements relate to the payment of corporation tax?

No, corporation tax is currently still payable on the due date (9 months and 1 day after the year-end).

 

However, if this likely to cause you financial difficulties please phone HMRC’s time to pay support line on  0800 015 9559.

 

 

Grants and Loans

 

How do I apply for grants or loans?

 

Grants will be issued by the local authorities; please refer to:

 

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/874772/small-business-grant-fund-and-retail-guidance.pdf

 

Information regarding the business interruption loan can be found at:

 

https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses#support-for-businesses-through-the-coronavirus-business-interruption-loan-scheme

 

It may however be 4-6 weeks before you receive the money, so do please speak to your bank in the meantime for short term support.

 

Does a grant need to be repaid?

 

No, unlike loans a grant will not need to be repaid.

 

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