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.
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.