COVID-19 UPDATES

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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.

 

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.

 
 

Sole Trader & Partnership Businesses - 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 newly 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?

If your income was below £50,000 between April 2018 – April 2019, then you will be immediately eligible.

Businesses who are over the threshold can take an average self-employed income over the past 3 tax years, if this come out less than £50,000 then you will be deemed eligible.

 

How much can be claimed?

You will be able to receive 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?

If we are your accountant then your last three years accounts are uploaded to your Iris OpenSpace account. To log in to your account please click this link https://www.irisopenspace.co.uk/

If you are not a client of d&t, we would advise that you speak to your current accountant; or if you would like to discuss moving over to our services, please contact us via our contact page.

 

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 be ensuring that all our clients know of the application process as soon as it is published.

 

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?

 

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.

 

Step by Step Guide: 

As part of the application process you will be required to submit up to date accounts information from your most recent trading history. To stand the best chance of securing your funds ASAP, speak to our team today! 

The first step is to work with d&t to prepare the relevant documentation required to secure the loan facility. This will likely include: 
 

  • Management accounts 

  • Cash flow forecast 

  • Business plan 

  • Historic accounts 

  • Details of assets 
     

Please Note: Requirements for each loan facility will vary depending on the lender, if you are unsure if your business bank allows for this scheme please find a complete list on the British Business Banks Website

 

  1. Speak to d&t to curate relevant documents 

  1. Approach Lender 

  1. Complete Application 

  1. Funds will be made available
     

The Detail: 
 

The Lender: 

Will have complete authority whether to accept or deny the application, which is why you must ensure you have supplied accurate information in its entirety or face the chance of your application being denied. 

Please note: if your loan is rejected by one lender, you can still approach another within the same scheme. 
 

Personal Guarantees: 

  • Loans under £250,000 – None Required 

  • Loans over £250,000 – May be required at lenders discretion but will exclude principal private residence (main home) and any recovery of funds is capped at 20% of the outstanding balance.
     

Who is Eligible: 

  • Business must be based in the UK 

  • Turnover less than £45 Million 

  • Be a viable candidate for a loan, if this were outside of a Pandemic (i.e. have a strong business without large amounts of outstanding debt) 

  • Be able to prove that your business has been affected by the Coronavirus. 
     

Requirements: 

  • Amount you would like to borrow 

  • What the money will be used for – This is to ensure that is being used for a suitable business purpose and is the right type of finance for your needs. 

  • The period over which you would like to pay back the loan – There will be an affordability assessment completed by the bank to ensure you will be able to pay the monies back. 

  • Supporting Documents (as noted above) 

  • Management accounts 

  • Cash flow forecast 

  • Business plan 

  • Historic accounts 

  • Details of assets 

 

Payroll: Furloughed Employees

To encourage companies not to make staff redundant, HMRC have pledged to cover 80% of a worker’s salary whilst 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, but the government have advised they will increase this should it be required. It will be at the discretion of the company if they choose to pay the employee the remaining 20%, but in most cases it’s likely the business will be unable to do so.

 

Below d&t have summarised the key points and how they may affect you. 

 

The company:

  • 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.

 

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 employee’s 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.

 

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

Payroll: Statutory Sick Pay SSP

If your business is still 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.

  • 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.

 

For d&t payroll clients only:

  • 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.

 
 

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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