We hope this guide provides you with information on the latest changes due to Covid-19. We are going to keep this up to date, keeping informing you and adjusting our services to meet the ever-changing climate. However, please bear in mind that we can only report what we know. A lot of information has not yet been provided by HMRC, Companies House, The Government and importantly, software providers.
Remember, deadlines still have to be met. We don’t want you getting any fines – so continue sending in your bookwork & vat so submissions are done on time. However, you can of course take advantage of the payment holiday now made available by the Government for the tax payments themselves.
Whilst we understand (as we are in the same position) that these are scary times and you need information ‘now’ please bear with us. We are in the hands of the Government and HMRC and the lack of information and set up of processes are challenging – as soon as we know we will pass on the information.
Please don’t contact our team on their personal mobiles which have to be used whilst working from home (these are for outgoing calls only) – please only use 01473 558866. We appreciate your support during this time.
Avanti are here for you and it is business as normal – albeit remotely
UPDATE 26TH JUNE- THIRD AMENDMENT TO THE CORONAVIRUS JOB RETENTION SCHEME (CJRS)
Click the link for full details of the amendment;
UPDATE 12TH JUNE
Chancellor announces changes to the Coronavirus Job retention Scheme (CJRS)
You can read the full update here
UPDATE 1ST JUNE
Chancellor confirms changes to SEISS and CJRS
The Chancellor, Rishi Sunak, has announced more details about the extension of the Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme, and we’ve outlined these below for you.
Coronavirus Job Retention Scheme
The Chancellor has announced three changes to the job retention scheme:
- From 1 July 2020, the scheme will be made more flexible to enable employers to bring previously furloughed employees back part time and still receive a grant for the time when they are not working.
- From 1 August 2020, employers will have to start contributing to the wage costs of paying their furloughed staff and this employer contribution will gradually increase in September and October.
- The scheme will close to new entrants from 30 June.
Part time furloughing
From 1 July 2020, businesses using the scheme will have the flexibility to bring previously furloughed employees back to work part time – with the government continuing to pay 80% of wages for any of their normal hours they do not work up until the end of August. This flexibility comes a month earlier than previously announced to help people get back to work.
Employers will decide the hours and shift patterns their employees will work on their return, and will be responsible for paying their wages in full while working. This means that employees can work as much or as little as the business needs, with no minimum time that they can furlough staff for.
Any working hours arrangement agreed between a business and their employee must cover at least one week and be confirmed to the employee in writing. When claiming the CJRS grant for furloughed hours, they will need to report and claim for a minimum period of a week. They can choose to make claims for longer periods such as on monthly or two weekly cycles if preferred. Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.
If employees are unable to return to work, or employers do not have work for them to do, they can remain on furlough and the employer can continue to claim the grant for their full hours under the existing rules.
From August, the government grant provided through the job retention scheme will be slowly tapered.
- in June and July, the government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICs) and pension contributions for the hours the employee doesn’t work – employers will have to pay employees for the hours they work
- in August, the government will continue to pay 80% of wages up to a cap of £2,500 but employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs that they would have incurred if the employee had not been furloughed
- in September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 10% of wages to make up 80% of the total up to a cap of £2,500
- in October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee does not work – employers will pay ER NICs, pension contributions and 20% of wages to make up 80% of the total up to a cap of £2,500
- the cap on the furlough grant will be proportional to the hours not worked.
Many smaller employers have some or all of their employer NIC bills covered by the Employment Allowance so will not be significantly impacted by that part of the tapering of the government contribution.
Around a quarter of CJRS monthly claims relate to wages that are below the threshold where employer NICs and auto enrolment contributions are due, and so no employer contribution will be required for these furloughed employees in August.
It’s important to note that the scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full three-week period prior to 30 June.
This means that the final date by which an employer can furlough an employee for the first time will be 10 June for the current three-week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.
Guidance and support
Further support for employers and agents on how to calculate claims with this extra flexibility will be available by 12 June, including webinars and detailed online guidance. For information about how to claim, go to GOV.UK and search ‘Coronavirus Job Retention Scheme’.
Self-Employment Income Support Scheme
The Chancellor also announced plans to extend the Self-Employment Income Support Scheme (SEISS) for those people whose trade continues to be, or is newly, adversely affected by COVID-19 (coronavirus). Eligible self-employed people will be able to claim a second and final SEISS grant in August; this will be a taxable grant worth 70% of their average monthly trading profits for three months, paid out in a single instalment and capped at £6,570 in total.
The eligibility criteria for the second grant will be the same as for the first grant. People do not need to have claimed the first grant to claim the second grant: for example, their business may have been adversely affected by COVID-19 (coronavirus) more recently.
Claims for the first SEISS grant, which opened on 13 May, must be made no later than 13 July. Eligible self-employed people must make a claim before that date to receive the first SEISS grant (a taxable grant of 80% of their average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total). So far, there have been over 2.3 million claims worth £6.8 billion
It’s really important to note that as with the first SEISS grant, the eligible individual must make the claim themselves. Be aware, asking your agent to apply on your behalf will trigger a fraud alert and will result in significant delays to payment. However, you can help to prepare by ensuring they have the relevant information ready. The claims process is simple: HMRC will calculate the amount of self-employment support individuals will receive, they don’t need to do this themselves
More information about the second SEISS grant will be available on GOV.UK on 12 June.
Don’t forget if you’re self-employed, you could benefit from a SEISS grant now, If you think might be eligible for the first grant but haven’t yet made a claim, do so before 13 July.
UPDATE 20TH MAY
SSP REBATE SCHEME LAUNCHING
The coronavirus Statutory Sick Pay Rebate Scheme will launch online on 26 May.
The scheme will enable employers with less than 250 employees to claim coronavirus-related Statutory Sick Pay (SSP).
Employers are eligible to use the scheme if:
- they’re claiming for an employee who’s eligible for sick pay due to coronavirus
- they had a PAYE payroll scheme in operation before 28 February 2020
- they had fewer than 250 employees across all PAYE schemes on 28 February 2020
- they’re eligible to receive State Aid under the EU Commission Temporary Framework.
The repayment will cover up to two weeks of the applicable rate of SSP, and is payable if a current or former employee was unable to work on or after 13 March 2020 and entitled to SSP, because they either:
- have coronavirus
- are self-isolating and unable to work from home
- are shielding because they’ve been advised that they’re at high risk of severe illness from coronavirus.
To prepare to make a claim, employers should keep records of all the SSP payments they wish to claim for.
For more information about eligibility and how employers can prepare to use the scheme, please visit GOV.UK and search ‘Check if you can claim back Statutory Sick Pay paid to employees due to coronavirus (COVID-19)‘.
Tax agents are able to claim this on behalf of their clients, if you need help to claim, please call the trusted payroll bureau at MJB Avanti (08000) 388 799 for expert advice.
We will continue to update you about this scheme.
MJB Avanti, helping you and your business to navigate Covid-19.
UPDATE 13TH MAY
Launching Today the Self-Employment Income Support Scheme for Sole-traders and those in a Partnership whose business has been affected by coronavirus.
This Scheme is designed to match the support being given to furloughed employees.
Those able to make a claim have already been contacted by HMRC and can use a unique reference to make their claim.
The scheme will allow you to claim a taxable grant of 80% of your average monthly trading profits, paid out in a single instalment covering 3 months, and capped at £7,500 altogether. This is a temporary scheme, but it may be extended.
If you receive the grant you can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.
The grant does not need to be repaid but will be subject to Income Tax and NI.
You can claim if all of the following apply:
- you traded in the tax year 2018 to 2019 and submitted your Self Assessment tax return on or before 23 April 2020 for that year
- you traded in the tax year 2019 to 2020
- you intend to continue to trade in the tax year 2020 to 2021
- you carry on a trade which has been adversely affected by coronavirus
To work out your eligibility HMRC will first look at your 2018 to 2019 Self Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.
If you’re not eligible based on the 2018 to 2019 Self Assessment tax return, HMRC will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.
You’ll get a taxable grant based on your average trading profit over the 3 tax years:
- 2016 to 2017
- 2017 to 2018
- 2018 to 2019
HMRC will work out your average trading profit by adding together your total trading profits or losses for the 3 tax years, then we will divide by 3.
The grant amount HMRC works out for you will be paid directly into your bank account, in one instalment.
Before you start:
You should check if you can claim a grant through the Self-Employment Income Support Scheme, and find out when you’ll be able to make a claim.
You’ll need your:
- Self Assessment Unique Taxpayer Reference (UTR) – if you do not have this find out how to get your lost UTR
- National Insurance number – if you do not have this find out how to get your lost National Insurance number
- Government Gateway user ID and password – if you do not have a user ID, you can create one when you make your claim
- UK bank details (only provide bank account details where a Bacs payment can be accepted) including:
- bank account number
- sort code
- name on the account
- your address linked to your bank account
How to claim:
As your tax agent or adviser MJB Avanti cannot make the claim for you. You must make the claim yourself. But we are here to advise you and support you.
You’ll have to confirm to HMRC that your business has been adversely affected by coronavirus.
After you’ve claimed:
HMRC will check your claim and pay your grant into your bank account in the next 6 working days and will send an email when your payment is on its way.
Record keeping and reporting:
You must keep a copy of all records in line with normal self-employment record keeping requirements, including:
- the amount claimed
- the claim reference number
You should also keep any evidence that your business has been adversely affected by coronavirus such as:
- business accounts showing a reduction in turnover
- confirmation of any coronavirus-related business loans you have received
- dates your business had to close due to lockdown restrictions
- dates you or your staff were unable to work due to coronavirus symptoms, shielding or caring responsibilities due to school closures
How different circumstances affect the scheme:
- if your return is late, amended or under enquiry
- if you’re a member of a partnership
- if you’re on or took parental leave
- if you have loans covered by the loan charge
- if you claim averaging relief
- if you’re non-resident or chose the remittance basis
- state aid
If you need help with any aspect of claiming under the SEISS, please call MJB Avanti (08000) 388 799
UPDATE 12TH MAY
CHANCELLOR ANNOUNCES EXTENSION TO THE CJRS
Chancellor, Rishi Sunak has announced that the Governments’ Job Retention Scheme will remain open until the end of October.
To date the CJRS has kept 7.5 million workers employed, with almost 1 million businesses having taken advantage of the help available.
- Coronavirus Job Retention Scheme will continue until end of October
- furloughed workers across UK will continue to receive 80% of their current salary, up to £2,500
- new flexibility will be introduced from August to get employees back to work and boost economy
There will be some changes to the way the scheme operates from the start of August allowing some flexibility for furloughed workers.
Furloughed workers will be able to return to work part time from the start of August with employers expected to pay a percentage towards the salaries of those furloughed.
Furloughed workers will continue to receive 80% of their salary, up to £2,500 per month with employer payments substituting the current Government contribution.
While there has been no formal announcement that the furlough contribution will be reduced, the Chancellor commented;
“There will be no change to the amount received for those already on the scheme”– Rishi Sunak
Was this a warning that there are plans to reduce the contribution to the rumoured amount of 60%?
The Chancellor’s announcement accompanies Sundays updates from the PM, outlining the next phase in the Governments’ Coronavirus strategy.
We await further information on the pending changes to the furlough scheme, and will continue to bring you the updates. details should be announced by the end of May.
Click here to see how MJB Avanti can help you with furlough applications.
Source: 2020 Innovation
COVID-19 BUSINESS UPDATE
STEP 1. Monday 11th May – Work from home if you can – but if you can’t, you are actively encouraged to go back to work. But must maintain social distancing. Ideally do not go to work via public transport – so, walk, cycle etc.
STEP 2. Earliest June 1st – The Country may be in a position to open some shops and primary schools.
STEP 3. Earliest July 1st – Opening some of the hospitality industry and other public places.
ALL OF THIS IS CONDITIONAL:
• Depends on science, data and public health.
• Everyone following the advice
• Observe social distancing
• Fines will be increased for those that break the rules
UPDATE 1ST MAY
Further Updates On The Self Employed Grant Scheme
During the Pandemic, access to and information on help for the self employed, and partnerships has been delayed and often unclear, with those affected waiting to hear when the scheme would be available and unable to contact HMRC for any information. In essence, we’ve all been reliable on daily Government updates as individuals have effectively searched in the dark.
What Can You Claim?
The Self-Employed Income Support Scheme (SEISS) allows the self-employed to claim 80% of their average profits for the period up to 2018/19, limited to £2,500 a month, for a three-month period initially.
Like CJRS there are lots of conditions that need to be satisfied such as being self-employed in 2018/19 and continuing to trade in 2019/20 and 2020/21, or would be doing so if it the business had not been impacted by Coronavirus.
We are still awaiting details of the claims process but HMRC have updated their guidance on the calculation of “self-employed profits” and “total income”.
To make a successful claim the self-employed profits in 2018/19 must not exceed £50,000 and must be more than 50% of the individual’s total income. If that test is not met, then the same £50,000 and 50% tests are applied to average profits and total income over the three years (or shorter period) to 5 April 2019.
HMRC guidance has defined self-employed profits for the purposes of SEISS as turnover for the business less allowable business expenses and capital expenditure. This figure may not be the same figure as that originally declared in your self- assessment tax returns.
If the calculation results in a trading loss, the amount that is averaged is not nil for that year but the negative result.
HMRC state that total income for the purposes of the 50% test would be taxable income from all sources for the relevant year such as;
- property income
- bank interest
- employment income
- social security income
Unlike the furlough scheme mentioned earlier the self-employed can continue trading, albeit at a reduced level.
It is believed that HMRC are on target to open the SEISS in early May, they should write to those eligible for the scheme and payment should be received early June 2020. 
Reproduced from 2020 Innovation
UPDATE 28TH APRIL
Bounce Back Loan Scheme Announced
Following confirmation by the Office of Budget Responsibility confirming what we all suspected – that the Coronavirus pandemic will have a significant impact on the Global economy, Chancellor Rishi Sunak announced the launch of the Bounce Back Loan Scheme (BBLS)
The Chancellor has confirmed that businesses will be able to apply for the loan using a short, simple form with no complex eligibility criteria.
When will the scheme open?
The scheme will open for applications at 9am on Monday 4th May, and the loans will be available through a network of accredited lenders.
This was for many a surprising U-turn from the Chancellor, with the government previously refusing to offer a 100% government guarantee.
Small businesses will benefit from a new fast-track finance scheme providing loans with a 100% government-backed guarantee for lenders, the Chancellor announced yesterday.
Rishi Sunak said the new Bounce Back Loans scheme, which will provide loans of up to £50,000, would help bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic.
Key Points Of The Scheme
- Businesses will be able to borrow between £2,000 and £50,000 and access the cash within days.
- loans will be interest free for the first 12 months, and businesses can apply online through a short and simple form.
• Loan terms will be up to 6 years.
• No repayments will be due during the first 12 months.
The scheme will launch for applications on Monday 4 May. Businesses will be able to access these loans through a network of accredited lenders.
The government will work with lenders to ensure loans delivered through this scheme are advanced as quickly as possible and agree a low standardised level of interest for the remaining period of the loan.
You can apply for a loan if your business:
- is based in the UK
- has been negatively affected by coronavirus
- was not an ‘undertaking in difficulty’ on 31 December 2019
The following businesses are not eligible to apply:
- banks, insurers and reinsurers (but not insurance brokers)
- public-sector bodies
- further-education establishments if they are grant-funded
- state-funded primary and secondary schools
- if you are already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).
More information about the scheme will be published shortly.
Further details see: https://www.gov.uk/guidance/apply-for-a-coronavirus-bounce-back-loan
UPDATE 16th APRIL
Furlough System up and Running from 20th April
After much anticipation following the announcement of Government support measures for businesses, the new Furlough system from HMRC will be up and running from 20th April, and we need to start declaring those employees you would like to Furlough.
Please note; if any employee is furloughed this must be for a minimum of 3 weeks. They are not allowed to work at all. If yourself as a Director is going to be furlough you can work on Director duties, but no revenue generating activities.
We can provide you with an Avanti Furlough Leave Agreement that we recommend you use (or something similar) to ensure you get permission from your employees to furlough them. You must seek HR advice to ensure you carry this out correctly and in line with your employment terms.
HMRC advise of the information you will need to claim
- Your employer PAYE reference number
- The number of employees being furloughed
- National Insurance Numbers for the employees you want to furlough
- Names of the employees you want to furlough
- Payroll/works number for the employees you want to furlough
- Your Self-Assessment Unique Taxpayer Reference or Corporation Tax Unique Taxpayer Reference or Company Registration Number
- The claim period (start and end date)
- Amount claimed (per the minimum length of furloughing of 3 consecutive 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 your claim.
When will the claim be paid?
Claims will be paid within 6 working days; you should not contact us unless it is absolutely necessary – any queries should be directed to your agent, representative or our webchat service
We want to support you and ensure that your payroll is completed and submitted in good time, not least where you may be entitled to a furlough refund.
Authorised PAYE agents Vs File Only Agents
If you use an agent who is authorised to act for you for PAYE purposes, they will be able to make a claim on your behalf. If you use a file only agent (who files your RTI return but doesn’t act for you on any other matters) they won’t be authorised to make a claim for you and you will need to make the claim yourself. Your file only agent can assist you in obtaining the information you need to claim (which is listed above). We are making the claim process as straightforward as possible.
If you would like Avanti to manage this for you, please contact us 01473 558866 ASAP as we will need to complete the work to finalise the furloughed employees by the 20th April.
UPDATE 14th APRIL
Furlough scheme cut-off date extended to 19 March
Thousands more employees will able to receive support through the Coronavirus Job Retention Scheme (CJRS) after the eligibility date was extended to 19 March 2020, the government announced
• eligibility cut-off date for Coronavirus Job Retention Scheme extended to 19 March 2020
• the change will mean thousands more workers can be furloughed
• scheme expected to be fully operational next week
Under the scheme announced by Chancellor Rishi Sunak last month, employers can claim a grant covering 80% of the wages for a furloughed employee, subject to a cap of £2,500 a month.
To qualify and to protect against fraudulent claims, individuals originally had to be employed on February 28 2020.
But following a review of the delivery system and to ensure the scheme helps as many people as possible, new guidance published today has confirmed the eligibility date has been extended to March 19 2020– the day before the scheme was announced.
Employers can claim for furloughed employees that were employed and on their PAYE payroll on or before 19 March 2020. This means that the employee must have been notified to HMRC through an RTI submission notifying payment in respect of that employee on or before 19 March 2020.
This change makes the scheme more generous while keeping the substantial fraud risks under control and is expected to benefit over 200,000 employees.
HMRC have been working at pace to delivering the scheme, which is due to be fully operational next week.
The CJRS is part of an unprecedented package of measures announced by the Chancellor to protect individuals and businesses.
This includes significant support for the self-employed and immediate steps to give businesses access to cash to pay its rent, salaries or suppliers.
If any employer now thinks they are eligible for support, they can find out more here 
Reproduced from Croner Taxwise
UPDATE 6th APRIL
Changes announced to Coronavirus Business Interruption Loan Scheme (CBILS)
Many small businesses that have applied for a government backed CBILS loan thus far have been offered standard overdrafts and loans – without the Government’s 80% guarantee – on the basis that they fit the banks’ criteria for this type of lending.
The Chancellor has now confirmed that this is not the intention of his CBILS scheme and that from now on all businesses affected by the COVID-19 disruption should be offered a CBILS loan with the government guarantee. This change is underlined by the following statement in the press release:
“To maximise the support available, the Chancellor is extending the CBILS so that all viable small businesses affected by COVID-19, and not just those unable to secure regular commercial financing, will now be eligible should they need finance to keep operating during this difficult time”
A summary of other changes to CBILS are set out below.
- Lenders will be banned from requesting personal guarantees on loans under £250,000.
- For loans over £250,000 personal guarantees will be limited to 20% of any amount outstanding on the CBILS lending after any other amounts have been recovered from business assets.
These two changes will provide further reassurance for business owners. Not only will their homes be protected – lenders are already prohibited from asking business owners to put their house on the line – but will also limit the exposure to other personal assets.
Reassuringly, these changes will apply to finance already offered under CBILS.
Further changes include:
The Government encouraging operational changes to speed-up applications under the scheme.
The government still covering the first twelve months of interest and bank fees.
A new Coronavirus Large Business Interruption Loan Scheme (CLBILS) is to be made available to enable banks to make loans under the scheme of up to £25m (the present limit for the smaller scheme is £5m). This will allow firms with an annual turnover of between £45m and £500m access to the 80% government guarantee.
The Government actively requesting that banks keep interest rates to “a reasonable level”. After all, base rates are at a record low…
These changes should make it easier for small and mid-sized firms to get access to funding that will support their efforts to survive the COVID-19 disruption. Readers who need to make an application would be wise to revise their business cashflow and other projections prior to making an application.
This funding is a loan not a grant.
The impact of loan repayments and interest charges after the first twelve months need to be considered as part of this planning process.
We can help you consider your options and prepare the necessary forecasts email email@example.com or call 01473 558866
Claim for your employees’ wages through the Coronavirus Job Retention Scheme
Find out if you’re eligible and how much you can claim to cover wages for employees on temporary leave (‘furlough’) due to coronavirus (COVID-19).
The online service you’ll use to claim is not available yet. We expect it to be available by the end of April 2020.
If you cannot maintain your current workforce because your operations have been severely affected by coronavirus (COVID-19), you can furlough employees and apply for a grant that covers 80% of their usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that wage.
This is a temporary scheme in place for 3 months starting from 1 March 2020, but it may be extended if necessary and employers can use this scheme anytime during this period. It is designed to help employers whose operations have been severely affected by coronavirus (COVID-19) to retain their employees and protect the UK economy. However, all employers are eligible to claim under the scheme and the government recognises different businesses will face different impacts from coronavirus.
Who can claim
You must have:
- created and started a PAYE payroll scheme on or before 28 February 2020
- enrolled for PAYE online – this can take up to 10 days
- a UK bank account
Any entity with a UK payroll can apply, including businesses, charities, recruitment agencies and public authorities.
Apprentices can be furloughed in the same way as other employees and they can continue to train whilst furloughed.
However, you must pay your Apprentices at least the Apprenticeship Minimum Wage, National Living Wage or National Minimum Wage (AMW/NLW/NMW) as appropriate for all the time they spend training.
This means you must cover any shortfall between the amount you can claim for their wages through this scheme and their appropriate minimum wage.
Guidance is available for changes in apprenticeship learning arrangements because of COVID-19.
Public sector organisations
The government expects that the scheme will not be used by many public sector organisations, as most public sector employees are continuing to provide essential public services or contribute to the response to the coronavirus outbreak.
Where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for staff costs.
Organisations who are receiving public funding specifically to provide services necessary to respond to COVID-19 are not expected to furlough staff.
In a small number of cases, for example where organisations are not primarily funded by the government and whose staff cannot be redeployed to assist with the coronavirus response, the scheme may be appropriate for some staff.
Individuals can furlough employees such as nannies provided they pay them through PAYE and they were on their payroll on, or before, 28 February 2020.
Where a company is being taken under the management of an administrator, the administrator will be able to access the Job Retention Scheme. However, we would expect an administrator would only access the scheme if there is a reasonable likelihood of rehiring the workers. For instance, this could be as a result of an administration and pursuit of a sale of the business.
Employees you can claim for
You can only claim for furloughed employees that were on your PAYE payroll on or before 28 February 2020.
Employees hired after 28 February 2020 cannot be furloughed and claimed for in accordance with this scheme.
Employees can be on any type of employment contract, including full-time, part-time, agency, flexible or zero-hour contracts. Foreign nationals are eligible to be furloughed.
To be eligible for the grant, when on furlough, an employee cannot undertake work for, or on behalf, of the organisation. This includes providing services or generating revenue. Employers are free to consider allocating any critical business tasks to staff that are not furloughed. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.
If you made employees redundant or they stopped working for you after 28 February
If you made employees redundant, or they stopped working for you on or after 28 February 2020, you can re-employ them, put them on furlough and claim for their wages through the scheme.
If your employees are working reduced hours
If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme.
If your employee is on unpaid leave
You can only claim for employees that started unpaid leave after 28 February 2020.
If your employee is self-isolating or on sick leave
If you’re employee is on sick leave or self-isolating, they’ll be able to get Statutory Sick Pay.
You cannot claim for employees while they’re getting Statutory Sick Pay, but they can be furloughed and claimed for once they are no longer receiving Statutory Sick Pay.
You can claim for furloughed employees who are shielding in line with public health guidance (or need to stay home with someone who is shielding) if they are unable to work from home and you would otherwise have to make them redundant.
Employees with caring responsibilities
Employees who are unable to work because they have caring responsibilities resulting from coronavirus (COVID-19) can be furloughed. For example, employees that need to look after children can be furloughed.
If your employee has more than one job
If your 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.
Employees can be furloughed in one job and receive a furloughed payment but continue working for another employer and receive their normal wages.
If your employee is on a fixed term contract
Employees on fixed term contracts can be furloughed. Their contracts can be renewed or extended during the furlough period without breaking the terms of the scheme. Where a fixed term employee’s contract ends because it is not extended or renewed you will no longer be able claim grant for them.
Eligible individuals who are not employees
As well as employees, the grant can be claimed for any of the following groups, if they are paid via PAYE:
- office holders (including company directors)
- salaried members of Limited Liability Partnerships (LLPs)
- agency workers (including those employed by umbrella companies)
- limb (b) workers
The guidance below sets out specific considerations for those individuals who are paid via PAYE, but who are not necessarily employees in employment law. Unless explicitly set out below, all other guidance is applicable to these cases, and should be followed.
Office holders can be furloughed and receive support through this scheme. The furlough, and any ongoing payment during furlough, will need to be agreed between the office holder and the party who operates PAYE on the income they receive for holding their office. Where the office holder is a company director or member of a Limited Liability Partnership (LLP), the furlough arrangements should be adopted formally as a decision of the company or LLP.
As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.
Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, for instance, they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.
This also applies to salaried individuals who are directors of their own personal service company (PSC).
Salaried Members of Limited Liability Partnerships (LLPs)
Members of LLPs who are designated as employees for tax purposes (‘salaried members’) under the Income Tax (Trading and Other Income) Act (ITTOIA) 2005 are eligible to be furloughed and receive support through this scheme.
The rights and duties of a member of an LLP are set out in an LLP agreement and in the absence of an agreement, default provisions in the LLP Act 2000, based upon company and partnership law. Such an agreement may include separate agreement between the LLP and an individual member setting out the terms applicable to that member’s relationship with the LLP.
To furlough a member, the terms of the LLP agreement (or any such agreement between the LLP and the member) may need to be varied by a formal decision of the LLP, for example to reflect the fact that the member will perform no work in the LLP for the period of furlough, and the effect of this on their remuneration from the LLP. For an LLP member who is treated as being employed by the LLP (in accordance with s863A of ITTOIA 2005), the reference salary for this scheme is the LLP member’s profit allocation, excluding any amounts which are determined by the LLP member’s performance, or the overall performance of the LLP.
Agency Workers (including those employed by umbrella companies)
Where agency workers are paid through PAYE, they are eligible to be furloughed and receive support through this scheme, including where they are employed by umbrella companies.
Furlough should be agreed between the agency, as the deemed employer, and the worker, though it would be advised to discuss the need to furlough with any end clients involved. As with employees, agency workers should perform no work for, through or on behalf of the agency that has furloughed them while they are furloughed, including for the agency’s clients.
Where an agency supplies clients with workers who are employed by an umbrella company that operates the PAYE, it will be for the umbrella company and the worker to agree whether to furlough the worker or not.
Limb (b) Workers
Where Limb (b) Workers are paid through PAYE, they can be furloughed and receive support through this scheme.
Those who pay tax on their trading profits through Income Tax Self-Assessment, may instead be eligible for the Self-Employed Income Support Scheme (SEISS), announced by the Chancellor on 26 March 2020.
Read more information on the Self-Employed Income Support Scheme, including eligibility criteria and how to claim.
Contingent workers in the public sector
The Cabinet Office has issued guidance on how payments to suppliers of contingent workers impacted by COVID-19 should be dealt with where the party receiving the contingent worker’s services is a Central Government Department, an Executive Agency of a Central Government Department or a Non-Departmental Public Body.
Read more information on contingent workers impacted by COVID-19. This guidance applies to agency workers paid through PAYE, as well as those paid through umbrella companies on PAYE and off-payroll workers supplying their services through a Personal Service Company (PSC).
If your employee does volunteer work
A furloughed employee can take part in volunteer work, if it does not provide services to or generate revenue for, or on behalf of your organisation. Your organisation can agree to find furloughed employees new work or volunteering opportunities whilst on furlough if this is in line with public health guidance.
If your employee undertakes training
Furloughed employees can engage in training, as long as in undertaking the training the employee does not provide services to, or generate revenue for, or on behalf of their organisation. Furloughed employees should be encouraged to undertake training.
Where training is undertaken by furloughed employees, at the request of their employer, they are entitled to be paid at least their appropriate national minimum wage for this time. In most cases, the furlough payment of 80% of an employee’s regular wage, up to the value of £2,500, will provide sufficient monies to cover these training hours. However, where the time spent training attracts a minimum wage entitlement in excess of the furlough payment, employers will need to pay the additional wages (see National Minimum Wage Section for more details).
If your employee is on maternity leave, adoption leave, paternity leave or shared parental leave
The normal rules for maternity and other forms of parental leave and pay apply.
You can claim through the scheme for enhanced (earnings related) contractual pay for employees who qualify for either:
- maternity pay
- adoption pay
- paternity pay
- shared parental pay
Agreeing to furlough employees
Employers should discuss with their staff and make any changes to the employment contract by agreement. 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 grant employers must confirm in writing to their employee confirming that they have been furloughed. A record of this communication must be kept for five years.
You do not need to place all your employees on furlough. However, those employees who you do place on furlough cannot undertake work for you.
How much you can claim
You’ll need to claim for:
- 80% of your employees’ wages (even for employee’s on National Minimum Wage) – up to a maximum of £2,500. Do not claim for the worker’s previous salary.
- minimum automatic enrolment employer pension contributions on the subsidised wage
You can choose to top up your employee’s salary, but you do not have to. Employees must not work or provide any services for the business while furloughed, even if they receive a top-up salary.
Grants will be prorated if your employee is only furloughed for part of a pay period.
Claims should be started from the date that the employee finishes work and starts furlough, not when the decision is made, or when they written to confirming their furloughed status.
The way you work out your employees’ wages is different depending on what type of contract they’re on, and when they started work.
Full or part time employees on a salary
Claim for the 80% of the employee’s salary, as of 28 February 2020, before tax.
Employees whose pay varies
If the employee has been employed for 12 months or more, you can claim the highest of either the:
- same month’s earning from the previous year
- average monthly earnings for the 2019-2020 tax year
If the employee has been employed for less than 12 months, claim for 80% of their average monthly earnings since they started work.
If the employee only started in February 2020, work out a pro-rata for their earnings so far, and claim for 80%.
Employer National Insurance and Pension Contributions
You’ll still need to pay employer National Insurance and pension contributions on behalf of your furloughed employees, and you can claim for these too.
You cannot claim for:
- additional National Insurance or pension contributions you make because you chose to top up your employee’s salary
- any pension contributions you make that are above the mandatory employer contribution
Past Overtime, Fees, Commission, Bonuses and non-cash payments
You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded.
Benefits in Kind and Salary Sacrifice Schemes
The reference salary should not include the cost of non-monetary benefits provided to employees, including taxable Benefits in Kind. Similarly, benefits provided through salary sacrifice schemes (including pension contributions) that reduce an employee’s taxable pay should also not be included in the reference salary. Where the employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.
Normally, an employee cannot switch freely out of a salary sacrifice scheme unless there is a life event. HMRC agrees that COVID-19 counts as a life event that could warrant changes to salary sacrifice arrangements, if the relevant employment contract is updated accordingly.
Apprenticeship Levy and Student Loans
Both the Apprenticeship Levy and Student Loans should continue to be paid as usual. Grants from the Job Retention Scheme do not cover these.
National Minimum Wage
Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW)/ Apprentices Minimum Wage (AMW) for the hours they are working or treated as working under minimum wage rules.
This means that furloughed workers who are not working can be paid the lower of 80% of their salary or £2,500 even if, based on their usual working hours, this would be below their appropriate minimum wage. However, time spent training is treated as working time for the purposes of the minimum wage calculations and must be paid at the appropriate minimum wage, taking into account the increase in minimum wage rates from 1 April 2020. As such, employers will need to ensure that the furlough payment provides sufficient monies to cover these training hours. Where the furlough payment is less than the appropriate minimum wage entitlement for the training hours, the employer will need to pay the additional wages to ensure at least the appropriate minimum wage is paid for 100% of the training time.
Where a furloughed worker is paid close to minimum wage levels and asked to complete training courses for a substantial majority of their usual working time employers are recommended to seek independent advice or contact Acas.
What you’ll need to make a claim
Employers should discuss with their staff and make any changes to the employment contract by agreement. Employers may need to seek legal advice on the process. If sufficient numbers of staff are involved, it may be necessary to engage collective consultation processes to procure agreement to changes to terms of employment.
To claim, you will need:
- your ePAYE 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 consecutive 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 your claim.
You should make your claim using the amounts in your payroll – either shortly before or during running payroll. Claims can be backdated until the 1 March where employees have already been furloughed.
If appropriate, worker’s wages should be reduced to 80% of their salary within your payroll before they are paid. This adjustment will not be made by HMRC.
Minimum furlough periods
Any employees you place on furlough must be furloughed for a minimum period of 3 consecutive weeks. When they return to work, they must be taken off furlough. Employees can be furloughed multiple times, but each separate instance must be for a minimum period of 3 consecutive weeks.
After you’ve claimed
HMRC will check your claim, and if you’re eligible, pay it to you by BACS to a UK bank account.
You must pay the employee all the grant you receive for their gross pay, no fees can be charged from the money that is granted.
When the government ends the scheme
When the government ends the scheme, you must make a decision, depending on your circumstances, as to whether employees can return to their duties. If not, it may be necessary to consider termination of employment (redundancy).
HMRC will process all claims made before the scheme ends.
When your employees are on furlough
You cannot ask your employee to do any work that:
- makes money for your organisation
- provides services for your organisation
They can take part in volunteer work or training.
Your employees will still pay the taxes they normally pay out of their wages. This includes pension contributions (both employer contributions and automatic contributions from the employee), unless the employee has opted out or stopped saving into their pension.
Employees still have the same rights at work, including:
- Statutory Sick Pay
- maternity and other parental rights
- rights against unfair dismissal
- redundancy payments
Grants cannot be used to substitute redundancy payments. HMRC will continue to monitor businesses after the scheme has closed.
Working for a different employer
If contractually allowed, your employees are permitted to work for another employer whilst you have placed them on furlough.
For any employer that takes on a new employee, the new employer should ensure they complete the starter checklist form correctly. If the employee is furloughed from another employment, they should complete Statement C.
Tax Treatment of the Coronavirus Job Retention Grant
Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore 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.
UPDATE – 27th MARCH
HELP FOR SELF-EMPLOYED BUSINESS
Brief details as known today:
- Taxable grant 80% of average 3 years profits up to £2500 per month
- Grant does not need to be paid back, although it will obviously be taxable on your earnings for this year when you come to do your next tax return
- Available for 3 months
- They’ll pay the grant directly into your bank account, in one lump sum
- Can claim and continue with business
- If don’t have 3 years tax returns – will take 1 or 2 years.
- But if no records, no help.
- Trading profits up to £50K
- Majority of income must be from self-employment
- If not yet submitted April 19 return due 31st Jan 2020 – have 4 more weeks to submit and be included
- Will be up and running June and back dated to March – one lump payment in June
- Can take advantage of Universal Tax Credits
- If you are a vat registered business, you will not have to make VAT payments due in the period from 20 March until 30 June 2020, you will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during this period, this applies to all businesses, regardless of size and it applies automatically so you do not have to apply for this, VAT refunds and reclaims will still be paid by the government as normal.
- Don’t contact the HMRC yet, each person will be contacted soon by the HMRC who will then ask you to apply online
- Once HMRC has received your claim and you are eligible for the grant, they will contact you to tell you how much you will get and sort the payment details
- In the meantime, everyone who is self-employed can still apply for universal credit, which can be up to £1800 a month, they mentioned you can get a cash advance on this within days as stated in the same announcement today
- Don’t forget Payments on Account also deferred
If you are worried about getting in business debt, then businesses that cannot afford to pay tax bills as a result of coronavirus can approach HM Revenue & Customs (HMRC) to see if they will agree to a ‘time to pay’ agreement which would suspend debt collection. HMRC will want to discuss the business’s specific circumstances. If HMRC agree, they will enter into an instalment arrangement tailored to the business’s specific circumstances and will suspend debt collection proceedings. HMRC will also cancel penalties and interest charges to
Also contact everyone you pay money to, whether it be private landlord, car finance company etc, all of which seem to be making allowances for the exceptional circumstance we find ourselves in. For example, after a call to their car finance company a client was asked to just to make a token payment of £50 or less for this month and will take each month going forward pretty much as it comes until things get back to normal. We obviously cannot state all clients will be treated this way.
STING IN THE TAIL: – ‘Observation’ by Chancellor or Exchequer that taxes are not consistent between sole-traders and employees. We expect tax increases in future!
Look out for more posts on this and other updates coming soon….
GOVERNMENT INFOMRATION ON SELF-EMPLOYMENT SUPPORT SCHEME
The government site supporting our information above
BUSINESS RATE RELIEF GRANT
One of our team has done some research and found out that if your rateable property value is £15,000 or under, then you are eligible for this grant. You do not need to do anything as your local authority will be writing to those eligible.
It does say that this grant won’t potentially be available until early April, so in the meantime you may wish to consider alternatively funding available from HMRC, such as the Coronavirus Business Interruption Loan Scheme, which you will need to contact your bank to apply for. This is a loan whereby no interest will be chargeable for the first 12 months.
The bank will need some specific financial information which we have, so if this is something you would like to receive, please let us know and email:
Emmalouise.firstname.lastname@example.org or your allocated accountant.
LATEST GOVERNMENT WEBSITE INFORMATION
This guidance is such along the lines of that we produced yesterday from the ICAEW Tax Faculty, more of a confirmation
UPDATE – 26th MARCH
SCAM & PHISHING ALERT!
As we all embark on a minimum three-week lockdown to contain the COVID-19 pandemic; unsavoury individuals are taking advantage of the pressure we are all under using this to increase their targeting of email / text and phone call scams and phishing techniques
- Emails from e.g. World Health Organization (WHO). Often emails direct the reader to click on a link and inputting names and passwords
- Text messages from e.g. GOV.UK. incorporating a dangerous phishing link which has attachments that could compromise computers and mobile devices.
- There has even been a scam targeting parents, offering free school meals in exchange for bank details.
- Scam telephone calls are on the increase too. For example, they may claim to work for government organisations such as HM Revenue and Customs (HMRC) or your high-street bank.
What to do?
- Keep up to date with the news and trusted sources such as Avanti! (https://www.avantitaxaccountants.uk.com/assistance-to-businesses-employees-due-to-covid-19/) as scammers are trying to exploit those who are even a few hours behind the curve and give false information.
- Be especially dismissive of SMS messages – following the official UK_GOV SMS requesting you to stay indoors, scammers have been following up with various fake messages pretending to offer guidance and money.
Vehicle owners to be granted MOT exemption in battle against coronavirus
Temporary exemption will enable vital services to continue, frontline workers to get to work, and people to get essential food and medicine during the COVID-19 outbreak.
See HERE for details
Please note that if you pay your VAT by Direct Debit you must cancel this if you want to take advantage of the VAT being deferred.
For anyone using Xero to run their payroll, they have just added an option to pay SSP on day 1 due to Coronovirus, see information HERE
The Coronavirus Job Retention Scheme & The Furlough Scheme – Further information
The following is the understanding of the ICAEW Tax Faculty on this policy and how this will work based on the information published so far. It should not be relied on for advice at this stage but is intended to give an indication of how the scheme will work.
Key policy objectives of the scheme
Overall objective is to keep people at home while enabling employers to retain staff who will be needed when they begin to rebuild their businesses in the future. This will enable work to begin again with a critical core who have the necessary knowledge.
Rules as outlined in official statements released at 23 March 2020
- Furloughed members of staff must not work for the employer during the period of furlough.
- Furlough is from 1 March 2020, so is to be backdated. It will last for at least 3 months and will be extended if necessary. Note that while the scheme is backdated to the beginning of March as it is intended to support all those employed then, a firm will only be eligible to claim the grant once they have agreed the furlough with their staff and staff have stopped working for the employer. This will of course be subject to employment law in the usual way.
- It is available to employees on the payroll at 29 February 2020.
- All UK businesses are eligible, ‘any employer on the country, small or large, charitable or non-profit’ to use the Chancellor’s words
- The scheme pays a grant (not a loan) to the employer.
- The grant will be paid to the employer through a new online system which is being built for this purpose.
- The employer will pay the employee through payroll, using the Real Time Information (RTI) system as usual, as required by the employment contract. This contract may be renegotiated but that is a matter for employment law. So RTI system reporting of payroll will continue as normal.
- Scheme will be administered by HMRC
- Relevant employees must be designated as furloughed employees
- Employers will submit information to HMRC through a new online portal
- As this will take time to build, businesses should look to the Coronovirus Business Interruption Loan Scheme to support cash flow in the meantime. The narrative used in the information released so far says ‘if your employer cannot cover staff costs due to COVID-19 they may be able to access support…’. This is a conditional phrase which may relate to existing funds available to the employer. We do not yet know how these might be determined, nor whether there is a bar of some description.
- Maximum grant will be calculated per employee and is the lower of:
- 80% of ‘wages’. The notes published so far, use the phrase ‘wage for all employment costs up to a cap of £2,500 per month’. It is our understanding that this includes employers’ NIC and pension contributions. Wages will be determined by reference to a defined period (yet to be announced)
- £2,500 per month
X Ltd employs Mr A at an annual salary of £24,000, so £2,000 per month. Mr A has opted out of auto enrolment.
Each month, Mr A currently receives net pay of £1,665 which is after deducting PAYE of £191 and employees NIC of £144. On this salary, the employer pays employers’ NIC of £174.
The available grant for the employer is the lower of
So, a grant of £1,739.
The cash required by X Ltd to furlough based on maintaining the existing salary is £435 per month. It is a matter for employment law whether the employer is required to pay this top up. Discussions with employees may have agreed that the employee has agreed to a different arrangement during their furlough.
Notes to illustration based on an extended understanding of how the scheme will work
- If Mr A had not opted out of auto enrolment, X Ltd would also be making pension contributions on his behalf. If so, the available grant is based on 80% of (gross salary + Employers’ NIC + employers pension contributions paid), subject to the monthly cap of £2,500.
- We understand that the rules for the scheme are being designed with underlying reference to employment law. If the individual is still under contract, Mr A can expect to receive his salary in full. The £1,739 grant paid to X Ltd should not be taken as the new maximum cost of employment to the employer unless the contract has been redrafted.
- Subject to the employment contract and any amendment, the salary which the employer actually pays the employee during the furlough period may be different to the pay paid used as the reference period and upon which the grant figure is based.
Pubco – a scenario
In the following illustration, the business has already closed as instructed by the government. We have had a number of enquiries along similar lines and are seeking clarification of our understanding of the rules apply.
Mr & Mrs Fuller are the tenants of a pub. They have a substantial wet and food trade as the pub is in a coastal location and does good trade over the Summer. The pub is open all year round.
Mr & Mrs Fuller operate the pub through a limited company (Pubco). They take salaries of £8,600 each and withdraw profits of £30,000 each in the form of dividends. They live above the pub and work long hours being in the pub every day.
Pubco employs three permanent staff supplemented by extra seasonal staff in the Summer months and at Christmas.
The pub closed on 20 March as instructed by the Prime Minister. and following the Chancellor’s announcement on 20 March, Pubco has furloughed its staff other than Mr & Mrs Fuller who are still living above the pub and dealing with the company administration. The contracts of employment of the other staff have been varied to permit furloughing and the three permanent staff members have agreed to accept a pay reduction to 80% of the previous level. The seasonal staff for this year have not yet been hired.
Our understanding is that Pubco will be eligible to receive the government grant support under the Coronavirus Job Retention Scheme for the monthly wages of the 3 permanent staff members. No grant support is available to support the living costs of Mr & Mrs Fuller.
Mr & Mrs Fuller will need to look for alternative support while the pub remains closed.
CORONAVIRUS-19 JOB RETENTION SCHEME: ICAEW TAX FACULTY further details
https://www.businesssupport.gov.uk/coronavirus-job-retention-scheme/ says “Under the coronavirus Job Retention Scheme, all UK employers with a PAYE scheme will be able to access support to continue paying part of their employees’ salary for those that would otherwise have been laid off during this crisis. This applies to employees who have been asked to stop working, but who are being kept on the pay roll, otherwise described as ‘furloughed workers’. HMRC will reimburse 80% of their wages, up to £2,500 per month. This is to safeguard workers from being made redundant. The Coronavirus Job Retention Scheme will cover the cost of wages backdated to March 1st and is initially open for 3 months, but will be extended if necessary.”.
The following paragraphs describe our understanding of the scheme and are our proposed guidance for member.
Which businesses are eligible?
Eligible businesses include charities and not-for-profit organisations and will include single director companies, although the same rules will apply as to other businesses. The grant applies to all UK based businesses. .
Many owner managed company director/shareholders pay small salaries and the balance of income as dividends. The scheme does not extend to dividends. Only the salary is relevant to the scheme.
How is payment going to work in practice?
We understand that the employer will pay the contractually agreed amounts as required by the employment contract in the usual way. This will involve paying the employee, and HMRC the PAYE and both primary and secondary National Insurance Contributions. The grant will be paid directly to the employer. We do not know how this will operate for employers which use a payroll agency.
Employers will claim the grant through a new separate portal to be built by HMRC.
What is the £2,500 maximum grant based on?
The £2,500 monthly grant covers all employment costs, ie, salary, employer pension contributions required by auto enrolment (if applicable), and employer NIC.
The earnings period to be used to determine the maximum grant has yet to be clarified. For new employees in particular, options will be needed and also for seasonal staff.
However, clearly there will need to be a base line and options being considered are likely to include,
a) Average for a prior period such as 12 months to 1 March or perhaps the month of February alone for a new employee
b) For seasonal workers, it might be possible to use the same period last year, such as 3 months March, April, May 2019.
c) For those working irregular hours or say, on reduced pay (eg’ maternity or sick leave) a different previous period may be needed.
Will entitlement to other employment benefits continue during the period of furlough?
The rules for the grant will not displace the existing employment contract. So for example, we would expect the entitlement to holiday and sick pay would depend on the contract.
Eligible employees are those on the payroll on 1 March 2020. It has yet to be clarified whether or not those re-employed under a new contract will qualify, although the policy intent would seem to support this would be reasonable.
We have had many questions asking if workers can be moved in and out of being furloughed if work becomes available to an employer and then ceases again? This has yet to be clarified, but we consider it very likely that they will. The scheme is being designed to allow for flexibility so that furloughed staff can be brought back to work to replace those still working who later become sick. We anticipate that this will be seen as difficult to regulate an anticipate that a minimum period of furlough leave may be built in as a requirement before the person van return to work. So we anticipate that the rules will specifically make provision for:
a) Sickness cover where a continuing employee is now off sick and a furloughed worker can provide cover
b) Where employees agree to share shifts to enable more of them to continue to be paid.
This will again depend on the employment contracts of those affected.
The matter of which employees an employer decides to furlough will be a matter for negotiation with staff and employment law.
The impact on job sharing employees and the decision to furlough will be a matter for negotiation with staff and employment law.
We presume that, subject to anything different stated in the employment contract, eligible employees would also include apprentices and agency workers.
We do not yet know whether the scheme will include deemed employees under the off payroll working rules.
An employee does not have to accept furlough if offered, but the employer could then make the employee redundant instead using the usual employment law procedure.
We understand that staff can study while they are being furloughed.
It is a condition of the scheme that the employee must do no work at all during the furlough period. The intention of the scheme is to allow employers to pay staff who are without work. HMRC will of course have visibility of pay records.
Employees with more than one employment
While we understand that an employee who is furloughed can do no work at all, our current understanding is that the employee can hold a separate employment with a different and unconnected employer which will be unaffected.
Update 25th March
Coronavirus Business Interruption Loan Scheme – Further information.
We wanted to share some further information which has been provided by the Government and some banks.
The key points are:
- Loans are available from £25,001 to £5m
- Available from 1-6 years
- No interest is Payable for 12 Months
- Capital Repayment Holidays are available for 12 months as well – so some clients will have no payments to make in the first year
- Loans are limited to 25% of the business’ turnover in 2019, or double the annual wage bill
These criteria will probably vary from one lender to another. However, there may be other forms of finance which might assist your, for example working capital loans, invoice discounting, or capital raising against property.
Email: email@example.com who will pass on your enquiry to the correct person.
Advice for Employees and Employers
ACAS have posted some useful advice HERE.
However, if you want to talk to someone about H.R. challenges you may be experiencing, we have contacts who can assist. So email your enquiry to:
firstname.lastname@example.org who will pass on your enquiry to the correct person.
Advice for Companies from Companies House
If your company cannot file accounts on time
Your company should take appropriate measures to make sure accounts are filed on time, like filing your accounts online if you’re able to.
If your accounts will be late because your company is affected by COVID-19, you can apply for an automatic and immediate 3 month extension to file your accounts. You must apply before your filing deadline.
Companies that have already extended their filing deadline, or shortened their accounting reference period, may not be eligible for an extension.
Late filing penalties
If you do not apply for an extension and your accounts have been filed late, an automatic penalty will be imposed. The registrar has very limited discretion not to collect a penalty.
Remember, HMRC have NOT extended any filing deadlines and we will therefore need to complete your account to finalise the tax returns. We are therefore advising clients to allow us to complete your work and file the accounts on time to avoid any potential fines.
Can my business claim on insurance for coronavirus related losses?
Every person in the country is being affected by coronavirus (Covid-19) and many businesses are suffering losses and face an unspecified amount of time of complete uncertainty.
In the case of losing takings and paying additional costs in relation to the Covid-19 outbreak, can businesses claim on their insurance?
Which businesses are suffering losses to Covid-19?
Organisations are doing the best they can to adapt as quickly as possible to facilitate remote working, help employees to take care of children, assist customers and to change their offering to best suit the marketplace but many will still have huge losses.
The government has now officially ordered the closure of:
- Food and drink venues with consumption on-site
- Pubs, bars, and nightclubs
- Entertainment venues like cinemas, theatres and bingo halls
- Museums and galleries
- Spas and wellness centres
- Casinos and betting shops
- All indoor leisure and sporting facilities including gyms
And this still leaves many businesses with the ambiguity of whether they should continue to trade or not and whether they should send their staff home if remote working isn’t an option.
What business insurance will cover Covid-19 losses?
According to advice from the Association of British Insurers (AIB), not many businesses will have purchased insurance that covers losses due to an infectious disease, particularly not that of the Covid-19 pandemic. Many insurers will make you state the name of the infectious disease(s) that you want to cover for when you take out the insurance and Covid-19 is a new virus.
The AIB said, “Irrespective of whether or not the government orders closure of a business, the vast majority of firms won’t have purchased cover that will enable them to claim on their insurance to compensate for their business being closed by the coronavirus.”
Business interruption insurance
Generally, business interruption insurance will need to have been specifically requested to be added on to a business insurance package and even this will normally just cover if the premises or equipment is damaged by fire, flood or storms of if essential equipment breaks down.
Your business might be entitled to claim if it has bought a ‘non-damage, denial of access’ extension to a business interruption policy if infectious diseases are unspecified, or you have included ‘notifiable diseases’ (which Covid-19 has been made by the government) or if you have specifically included Covid-19. And your business should be covered if it has cover for both pandemics and government-ordered closure (if it has been ordered to close).
If you are in any doubt you should check your policy documents and with your insurance broker as to what cover you have.
What to do if your business isn’t covered by insurance?
If like most businesses you don’t have any relevant cover, you may be able to take advantage of the government schemes to support businesses and individuals including:
- Business loans that are interest-free for 12 months (extended from 6 months).
- The paying of 80% of wages up to £2,500 a month for workers who aren’t working but are kept on the payroll.
- A 100% business rates holiday for hospitality, retail and leisure businesses.
- An increase in the grants available to small businesses and to retail, leisure and hospitality.
- Mortgage holidays of up to three months for individuals.
- If your business has been ordered to close, you should be covered by insurance if you have cover which states pandemics and government-ordered closure.
- Check with your policy documents and your insurance broker as to what your cover states.
- Most businesses don’t have the relevant business interruption insurance with the specific terms required.
- Check if you are entitled to assistance from one of the government help schemes for businesses and individuals. These are likely to be updated and added to as the situation changes.
- Coronavirus help and information from the AAT
- Covid-19 government guidance for employers, employees and businesses
- Covid-19 government support for businesses
Although not yet 100% confirmed, this is our understanding of Furloughing your employees: –
- You furlough the employees in writing, we recommend you seek HR advice on any changes to your employees.
- You continue to pay their wages until you can claim to be reimbursed.
- The HMRC system is due to be setup for applications by the end of April with payments to be made by the end of May.
Enforced Business Closures
Government sets out plans to enforce closure of businesses and other venues Local government will be responsible for enforcing regulations requiring those businesses asked to close.
Businesses who do not follow COVID-19 restrictions will be issued with prohibition notices Businesses who fail to comply will receive fines and could also face the loss of their alcohol license
There will be no upper limit to the fines of businesses who continue to ignore restrictions Local government will be responsible for enforcing regulations requiring those businesses asked to close on 20 March 2020, in new guidance issued 22 March 2020.
Businesses including pubs, cinemas, theatres and casinos were told to close from 21 March, as part of government drive to reduce the spread of the virus, protect the NHS and save lives.
Government confirmed on the 21st that Environmental Health and Trading Standards officers, with police support if appropriate, will work together to issue prohibition notices challenging unsafe behaviours where businesses do not follow these restrictions.
Environmental Health and Trading Standards officers will monitor compliance, and businesses who fail to comply can also receive fines. Continued non-compliance could then lead to the loss of alcohol licenses.
Under the Business Closure regulations introduced on March 21, officers will have powers to prosecute for breach of regulations.
The government will ensure that local authorities are funded for the new requirements as quickly as possible, in line with the New Burdens doctrine.
As of 2pm on 21 March 2020, these closures are enforceable by law in England and Wales due to the threat to public health. A business operating in contravention of the Health Protection (Coronavirus, Business Closures) Regulations 2020 will be committing an offence.
As agreed with the devolved administrations these measures will be extended to Scotland and Northern Ireland by Ministerial Direction once the Coronavirus Bill is in force.
A Bill before Parliament
Committee of the whole House: 23 March 2020
“Statutory self-employment pay”
- The Secretary of State must, by regulations, introduce a scheme of Statutory Self- Employment Pay.
- The scheme must make provision for payments to be made out of public funds to individuals who are
- self-employed, or
- The payments to be made in subsection 2. are to be set so that the net monthly earnings of an individual specified in subsection 2. do not fall below—
whichever is lower.
- No payment to be made under subsection 2. shall exceed £2,917 per month.
- A statutory instrument containing regulations under this section is subject to annulment in pursuance of a resolution of either House of Parliament.
Member’s explanatory statement
The purpose of this amendment is to make the Government ‘top up’ self-employed workers’ earnings to the lower of 80% of their net monthly earnings averaged over three years, or £2,917 a month.
We will keep you updated as further details become known
Article on Accounting Web confirms OMB Ltd Company Directors ARE entitled to 80%.
However, directors MUST follow the same rules as employees who have been furloughed, and this means, that they will NOT be able to do ANY work for their company during the period in which a claim is made.
Coronavirus Business Interruption Loan Scheme What Do You Need to Provide?
In all situations, being prepared can often make the burden a little lighter and in the current climate being proactive rather than reactive will help you to access the financial assistance you need.
It is advised that if you are seeking financial assistance via the Coronavirus Business Interruption Loan Scheme, you contact your main Bank first as each Bank will prioritise those already using their services first.
It would be beneficial to have the following information to hand in preparation as the team at Avanti understand this to be the information you are required to provide;
- Latest annual accounts that have been submitted to Companies House; full version not abbreviated to enable an insight into your trading performance pre Covid 19
- Latest M.I. (management information) figures from your accounting software package (ideally a Profit and Loss report and balance sheet) if available
- An up to date Debtors & Creditors list
- An overview as to how the CV-19 pandemic has affected the business; it would be advisable to include how this has affected your customers, supply chain & workforce.
- A breakdown of how the funding will assist you in the short term ; detail what costs / overheads the funds will cover
- Any loan or HP agreements you have (not NatWest) ; please advise where capital repayment holidays have already been agreed / in course to be agreed and what the new repayments are likely to be over 6 months
- Anything else you feel would be relevant to provide at this time
We hope that this may be useful to anyone looking to apply for the loan scheme, as an Avanti client if you require copies of your accounts, please contact the office 014733 558866 / email@example.com to request them.
We’re happy to help.
Can I go Limited to Access the 80% Staff Retention Scheme?
Following the Government’s announcement that it will assist businesses affected by Covid-19 with 80% of staff wages, we received an interesting question.
Our client as a sole trader has lost all source of income, and as yet the only advice we’re seeing is for sole traders to apply for benefits. The client asked if he could incorporate as a Limited Company and then pay himself a salary which would in theory be covered by the staff retention scheme?
Unfortunately, this is not possible, but why?
To be eligible for the staff retention scheme, you would need to have been employed on PAYE since 28th February 2020.
The VAT deferral will apply from 20 March 2020 until 30 June 2020.
VAT refunds and reclaims will be paid by the government as normal.
Companies House Filing
According to the Companies House website, if, immediately before the filing deadline, it becomes apparent that accounts will not be filed on time due to the company being affected by coronavirus, the company may make an application to extend the period allowed for filing.
The law presently gives a three-month extension, but normally it is Companies House policy to not allow extensions unless there are extreme circumstances.
The Financial Reporting Council (FRC) has indicated in its coronavirus updates that that Companies House has changed its policy to automatically allow for a two-month extension and then another month after that if companies can demonstrate extreme circumstances.
The link to our comprehensive guide is below, with information changing all the time, we will keep you as updated as possible.
If you need help understanding what this advice means for you, please pop a question on our social media pages, call Avanti 01473 558866, and follow us for further advice.
*Correct as of 23rd March 2020, subject to change as information is released by the Government.
Under the new Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis. The scheme, open to any employer in the country, will cover the cost of wages backdated to 1 March 2020 and will be open before the end of April. It will continue for at least three months and can include workers who were in employment on 28 February.
To claim under the scheme employers will need to:
designate affected employees as ‘furloughed workers’ and notify 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; and
submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. HMRC will set out further details on the information required.
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month.
While HMRC is working urgently to set up a system for reimbursement, we understand existing systems are not set up to facilitate payments to employers. Business that need short-term cash flow support, may benefit from the VAT deferral announced below and may also be eligible to apply for a Coronavirus Business Interruption Loan.
The next quarter of VAT payments will be deferred, meaning businesses will not need to make VAT payments until the end of June 2020. Businesses will then have until the end of the 2020-21 tax year to settle any liabilities that have accumulated during the deferral period.
The deferral applies automatically, and businesses do not need to apply for it. VAT refunds and reclaims will be paid by the government as normal.
Income Tax payments due in July 2020 under the Self-Assessment system will be deferred to January 2021.
Income Tax Self-Assessment payments due on the 31 July 2020 will be deferred until the 31 January 2021. This is an automatic offer with no applications required. No penalties or interest for late payment will be charged in the deferral period.
Self-employed people can now access full universal credit at a rate equivalent to statutory sick pay.
HMRC’s Time to Pay scheme can enable firms and individuals in temporary financial distress as a result of Covid-19 to delay payment of outstanding tax liabilities. HMRC’s dedicated Covid-19 helpline provides practical help and advice on 0800 0159 559.
Business Rates holidays and cash grants
No rates payable for the 2020-2021 tax year for any business in the retail, hospitality or leisure sectors.
In those sectors, if your rateable value is between £15K and £51k, you’ll also receive a cash grant of up to £25,000 per property.
Any business which gets small business rates relief, including those in the retail, hospitality or leisure sectors, will receive a cash grant of £10,000 (increased from £3,000 announced in the 11 March Budget).
The rates holiday and cash grants will be administered by local authorities and should be delivered automatically, without businesses needing to claim.
These should be available from Monday 23 March and are delivered by lenders that partner with the British Business Bank, including all the major banks. The lender receives a guarantee of 80% of the loan amount from the government.
They are available for UK-based businesses with turnover of no more than £45 million and can provide for a facility up to £5 million. The borrower remains liable for 100% of the debt.
No interest will be charged for the first 12 months.
The Bank of England has set up a scheme to finance working capital by purchasing commercial paper from larger business ‘making a material contribution to the UK economy’. Businesses do not need to have previously issued commercial paper in order to participate. The scheme will operate for at least 12 months.
Businesses that have cover for both pandemics and government-ordered closure should be covered. The government and insurance industry confirmed on 17 March 2020 that advice to avoid pubs, theatres, etc., is sufficient to make a claim as long as all other terms and conditions are met. Insurance policies differ significantly, so businesses should check the terms and conditions of their specific policy and contact their providers.
To access the Government Website providing information to businesses, see HERE
Remember to seek HR advice if you are in any doubt over your contracts or position as an employer affected by Covid-19. We have trusted contacts if you require a recommendation.
If you’re a director of a limited company with less than 250 employees, you can pay yourself two weeks of SSP if you need to self-isolate subject to meeting the minimum payroll requirement for SSP.
The government will refund £94 per week, maximum £188, to your company.
It will also refund SSP for staff of businesses with less than 250 employees for up to two weeks.
If you have symptoms of coronavirus infection (COVID-19), however mild, stay at home and do not leave your house for 7 days from when your symptoms started.
If you live with others and you are the first in the household to have symptoms of coronavirus, then you must stay at home for 7 days, but all other household members who remain well must stay at home and not leave the house for 14 days. The 14-day period starts from the day when the first person in the house became ill. See the stay at home guidance for more information.
You can get £94.25 per week Statutory Sick Pay (SSP) if you’re too ill to work. It’s paid by your employer for up to 28 weeks.
If you are staying at home because of COVID-19 you can now claim SSP. This includes individuals who are caring for people in the same household and therefore have been advised to do a household quarantine.
To check your sick pay entitlement, you should talk to your employer, and visit the Statutory Sick Pay (SSP) page for more information.
We are legislating for SSP to be paid from day 1, rather than day 4, of your absence from work if you are absent from work due to sickness or need to stay at home due to COVID-19. Once the legislation has been passed, this will apply retrospectively from 13 March. You should talk to your employer if you are eligible for SSP and need to claim.
If you have COVID-19 or are advised to stay at home, you can get an ‘isolation note’ by visiting NHS 111 online, rather than visiting a doctor. For COVID-19 cases this replaces the usual need to provide a ‘fit note’ (sometimes called a ‘sick note’) after 7 days of sickness absence.
Isolation notes will also be accepted by Jobcentre Plus as evidence of your inability to attend.
If you are not eligible for SSP – for example if you are self-employed or earning below the Lower Earnings Limit of £118 per week – and you have COVID-19 or are advised to stay at home, you can now more easily make a claim for Universal Credit or new style Employment and Support Allowance.
If you are eligible for new style Employment and Support Allowance, it will now be payable from day 1 of sickness, rather than day 8, if you have COVID-19 or are advised to stay at home.
If your employer cannot cover staff costs due to COVID-19, they may be able to access support to continue paying part of your wage, to avoid redundancies.
If your employer intends to access the Coronavirus Job Retention Scheme, they will discuss with you becoming classified as a furloughed worker. This would mean that you are kept on your employer’s payroll, rather than being laid off.
To qualify for this scheme, you should not undertake work for them while you are furloughed. This will allow your employer to claim a grant of up to 80% of your wage for all employment costs, up to a cap of £2,500 per month.
You will remain employed while furloughed. Your employer could choose to fund the differences between this payment and your salary but does not have to.
If your salary is reduced as a result of these changes, you may be eligible for support through the welfare system, including Universal Credit.
The Government intend for the Coronavirus Job Retention Scheme to run for at least 3 months from 1 March 2020 but will extend if necessary.
To access the Government website providing full information for employees, see HERE
Mortgage borrowers can apply for a three- month payment holiday from their lender. Both residential and buy-to-let mortgages are eligible for the holiday. It is important to remember that borrowers still owe the amounts that they don’t pay as a result of the payment holiday. Interest will continue to be charged on the amount they owe.
Tenants can apply for a three-month payment holiday from their landlord. No one can be evicted from their home or have their home repossessed over the next three months.
Whether you are currently in or out of work, if you are on a low income and affected by the economic impacts of COVID-19, you will be able to access the full range of the welfare system, including Universal Credit.
From 6 April we are increasing the standard allowance in Universal Credit and the basic element in Working Tax Credit for 1 year. Both will increase by £20 per week on top of planned annual uprating. This will apply to all new and existing Universal Credit claimants and to existing Working Tax Credit claimants.
You are now able to claim Universal Credit, and if required can access advance payments upfront without needing to attend a jobcentre.
You are able to claim Universal Credit, providing you meet the usual eligibility criteria.
To support you with the economic impact of the outbreak and allow you to follow government guidance on self-isolation and social distancing, from 6 April the requirements of the Minimum Income Floor will be temporarily relaxed. This change will apply to all Universal Credit claimants and will last for the duration of the outbreak.
New claimants will not need to attend the jobcentre to demonstrate gainful self-employment.
You should check your eligibility for Universal Credit, which is available for people in and out of work. Support for rental costs will be paid through Universal Credit.
From April, we are increasing Local Housing Allowance rates to the 30th percentile of market rents. This applies to all private renters who are new or existing Universal Credit housing element claimants and to existing Housing Benefit claimants.
We will be updating this page on a continuous basis to keep you, your business and your clients informed with all the latest information.
Avanti are here to help. We will contact clients affected by the different areas of assistance, such a payroll and we are keeping on top of it all by providing you with regular updates and continuing support.
As we have said, work still has to be done, deadlines still have to be met. We don’t want you or your business getting any fines – so continue sending in your bookwork, VAT & accounts work so submissions are done on time.
However, you can of course take advantage of the payment holiday for the tax payments themselves.
If you require any assistance keeping on top of the workload or require further details of these measures and how Avanti can help you, email your allocated accountant or
firstname.lastname@example.org who will pass the message on to the correct person.