Updated support for Small Businesses – New Lockdown Support Measures

After the announcement of another lockdown and the forced closure of many businesses, there has been some updated support released by the Government.  We will provide as much detail as we can for now and update when we have more information. 

Extension to the Furlough Scheme 

The Furlough scheme will be extended to December, with employees receiving 80% of their salary up to a maximum of £2,500.  The employers will be expected to cover the cost of national insurance and pension contributions only. 

The flexible furlough scheme will also remain in operation. 

To benefit, employees MUST be on their employer’s payroll on 30 October 2020, with an RTI submission being made on or before 30 October to qualify.   

We have no further information regarding the mechanics of the claim at the moment but will update once we do have more information. 

Business Grants 

For those businesses forced to close as a result of local or national restrictions, you will be eligible for the following: 

Properties with rateable values of £15k or less – Grants are to be £1,334 per month or £667 per two weeks.

Properties with a rateable value of between £15k - £51k – Grants are to be £2,000 per month or £1,000 per two weeks 

Properties with a rateable value of over £51k – Grants are to be £3,000 per month or £1,500 per two weeks. 

It would appear it’s likely down to local authorities whether the grants you receive will be paid monthly or fortnightly, so I would suggest you take a look at your local authority websites for further information. 

Mortgage holidays 

Borrowers affected by coronavirus who have not yet taken a mortgage payment holiday will be entitled to a six month payment holiday and those who have already started a payment holiday will be able to extend their existing holiday to six months without it impacting their credit file.  Apparently the FCA will be producing further information around this in the coming days. 

I am sure this package of measures will be extended and clarified in the coming days, and I will review and send out updates on this when necessary.   

I appreciate this is worrying times for all, and if there is anything I can do to help then please do let me know.

Updated support for Small Businesses – The ‘NEW’ Job Support Scheme

After the announcement of the end of the Furlough scheme and the start of the Job Support Scheme, there are some details below which hopefully clarify things for you going forward if you are using, or intend to use the scheme.

The end of Furlough as we know it

The Furlough (Job Retention Scheme) scheme is ending on the 31 October 2020.  All applications for this period and any previous periods not yet claimed will need to be completed by 30 November 2020.

Job Support Scheme

We are awaiting updated guidance on the mechanics of the claims process however the principles for the scheme are as follows;

-      Any employee on the scheme will need to work a minimum of 20% of their usual hours, for which they will be paid in full by the employer in the usual way

-      The employee will also receive on top, a further 66.67% of their normal pay for the hours they have not worked. 

-      The cost of this 66.67% will be split between the government and the employer.

-      The employer will pay 5% of the normal earnings for the hours not worked up to a maximum of £125 per employee per month.  They can pay more than this amount on a discretionary basis if they wish.

-      The government will pay the remaining 61.67% of the salary for the normal hours not worked up to a maximum of £1,541.75 per month.

-      Therefore, employees who earn £3,125 per month or less, are guaranteed to receive at least 73% of their normal wage.

The above details will be in place for those businesses that have not been forced to close as part of the governments enforced lockdowns.  If you do have a business that has been forced to close then the employee will be provided with 66.66% of their normal wages, up to a maximum of £2,083.33.

This amount will be fully refunded by the government, after being paid by the employer.  The employer can also choose to pay more than this total, however they will not be able to reclaim anything else.

How long is it running?

The scheme is running from 01 November 2020 to 30 April 2021 and we will be able to submit claims in arrears from 08 December 2020.

Neither the employee or the employer needs to have been on the existing furlough scheme to benefit from the job support scheme.

Eligibility

The main criteria are that in order to claim the employee must have been included on the payroll of your business and also still be employed by your business on the 23 September 2020

This means that any new employees from 24 September 2020 onwards will not be eligible for the scheme.

All employers who have LESS than 250 staff will not be required to take a financial impact test in order to claim.

You will only be able to claim for the employees that are working at least 20% of their hours.  Any employees not working at all will not be able to be included in the claim.

We expect the mechanism for calculating base earnings to be similar to the Furlough scheme, but we will provide an update once the guidance has been published.

If you have any queries or would like to discuss anything included in the above, please don’t hesitate to get in touch.

Updated support for Small Businesses – Changes to Furlough and update on SEISS

After the Chancellors announcement of the revised Job Retention Scheme and the self employment grant, there are some details below which hopefully clarify things for you going forward if you are using or intend to use the scheme.

What are the changes

From 01 July you can bring back employees that have been furloughed for any amount of time on a part time basis if necessary.

This basically means that if your employees only need to be in work for two days a week to meet demand, you can furlough them for the other three days and claim the furlough grant for those three days.

The total furlough period on a claim will need to be at least a week per employee but does not have to be a continuous week.

The scheme is being closed to new entrants on the 30 June, this means that they will only be able to claim the flexible furlough for employees who have already been furloughed for the minimum period of three weeks prior to the 30 June.

This basically means that if you want to furlough someone new, you need to do it by 10 June 2020 in order for them to be eligible after the 30 June.

We will have some further information on how the claims are to be calculated and more clarity on the scheme going forward on the 12 June.

The amount available to claim from the Government

August 2020 – The government will pay 80% of the gross wages of an employee up to £2,500. Employers will pay the Employers National Insurance and Pension contributions of furloughed employees from this date. For most small businesses, you will still have some of your Employment Allowance remaining so I expect that the real cost to you will be the pension amounts.

September 2020 – The Government will pay 70% of the gross wages up to a capped amount of £2,187.50. Employers will pay Employers National Insurance, pension contributions and also 10% of the gross wages to make up the 80% of gross salary up to the original cap of £2,500.

October 2020 – The Government will pay 60% of gross wages up to a capped amount of £1,875. Employers will pay Employers National Insurance, pension contributions and also 20% of the gross wages to make up the 80% of gross salary up to the original cap of £2,500.

Self Employed Income Support Scheme

You can still apply for the first instalment of the grant until the 13 July 2020. So if you haven’t done so already you have a little time.

They have announced that you will be able to apply for a second grant in August, although we have no date at this point.

The grant amount will be based on the same criteria as the first grant but this time is capped at 70% of your average monthly earnings for three months up to a maximum value of £6,570.

You don’t need to have claimed the first grant to claim the second grant.

If you have any queries or would like to discuss anything included in the above, please don’t hesitate to get in touch.

Updated support for Small Businesses – Bounce Back Loans

After the Chancellors announcement of the new Bounce Back Loan scheme, there are some details below which hopefully clarify whether you would benefit from accessing the funding.

What is a Bounce Back Loan

The loans are designed to be fast access to cash to help those smallest businesses keep going during the pandemic.

The idea is that you can borrow between £2,000 and £50,000 via an easy online, standard, application form and that the cash should be advanced within days rather than the usual weeks.

Eligibility

To be eligible for the loan your business must;

- Be based in the UK

- Have been negatively effected by COVID-19

- Was not an ‘undertaking in difficulty’ on 31 December 2019

There are some non-eligible businesses as well which are;

- Banks, insurers and reinsurers (this doesn’t include insurance brokers though)

- Public sector bodies

- State funded primary and secondary schools

Just to clarify, the ‘undertaking in difficulty’ point refers to an EU directive of which you can find the exact wording here; https://ec.europa.eu/competition/state_aid/legislation/rescue_resctructuring_communication_en.pdf

However, most simply it means those of you that have Limited Companies with a negative reserve balance at 31 December won’t be eligible for the loan.

Who can apply

It seems that anyone with a business, sole traders, limited companies and partnerships can apply. Although it’s not yet clear whether you will need a business bank account for this so that may have an impact on some of the sole traders.

Costs

The loan is set to be interest free for the first 12 months and there are also no repayments required for the first 12 months. The loan terms can be up to six years.

The interest rates on these loans also looks to be set at 2.5% across the board.

When can you apply

The loan scheme opens on Monday 04 May, the government are saying that it will be available from all ‘accredited’ lenders, however the general consensus at the moment seems to be that the high street banks will be the first to make it available to apply. Barclays for example already have their website up and running, although obviously you can’t yet apply.

CBILS and Bounce Back

If you’ve already taken a Coronavirus Business Interruption Loan then you can’t also apply for a Bounce Back loan, however if you’ve borrowed up to £50k then you can apply to convert the CBIL in to a Bounce Back at the same terms. These conversions will be available for 6 months up to the 04 November 2020.

Hopefully this is good news for some of you struggling with cash flow and may help out those of you who have fallen through the cracks with the schemes already announced.

If you have any queries or would like to discuss anything included in the above, please don’t hesitate to get in touch.

Laura

Updated support for Employers and Employees on Furlough

Dear All

Following on from my earlier guidance, we have now received some clarity over what support is available for those employers and employees wanting to use the furlough system.

What furlough means

If your company has been affected by COVID-19 and your staff can’t work, then you can place them on furlough and claim a grant back from HMRC that covers 80% of their payroll costs to you.

Furlough would mean that any employees on this scheme CANNOT work within the business during this time.

However, a furloughed employee can undertake training during this time as long as it doesn’t provide services to, or generate income for the organisation.

What you can claim

You can claim for 80% of your employees gross salary + employers national insurance contributions + minimum employers pension contributions, or £,2500, whichever figure is the lower amount.

You cannot include salary sacrifice amounts or non-cash benefit in kind amounts in the salary you use to calculate the 80%.

You should use the salary at the 28 February 2020 as your basis for these calculations.

You will initially be able to make these claims for a period of three months.

Employees who’s pay varies

If your employees wages vary from month to month as a result of hours worked, and they have worked for you for 12 months or more then you can claim the higher of;

- Same months earnings from prior year

- Average monthly earnings for 2019/20 tax year

If they have been working for less than 12 months then claim for 80% of their average monthly earnings during the period they’ve been employed by you.

If the employee started in February 2020 then you will need to work out a pro-rata for their earnings so far and claim for 80% of that.

For those employees that are partly paid with overtime, commission or bonuses, you can only claim for regular payments you are obliged to pay your employees, i.e. it’s in their contract and you would have to pay them this even if they didn’t do any work for the month.

Contingent and discretionary payments or bonuses are not to be included.

Telling your employees

You will need to tell your employees in writing about their furlough as it will involve a change to their employment contract. This will also confirm their period of furlough for them.

I have a template letter that you can use so please let me know if you would like a copy.

Furlough periods

There is a minimum furlough period of three consecutive weeks. Employees can be furloughed multiple times but each period must be of three consecutive weeks. In reality, employees could be furloughed for three weeks of every month, work for one week and then go back into furlough.

Other points

Employees will still pay their tax and national insurance on their wages as normal. They will also still have all the same rights as working employees, such as SSP, Maternity / Paternity, rights against dismissal and redundancy pay.

If they are allowed to do so in their employment contract, employees can work for another employer during a period of furlough from you.

Employees can also be furloughed by multiple employers at the same time.

Do you qualify?

- You must have created and started a PAYE scheme on or before 28 February 2020

- You must have enrolled for PAYE online

- You must have a UK bank account

What this means is that, those small companies that pay a wage to their Directors under the required PAYE limit of £6,136 per year are not eligible to claim on this scheme as they are not required to operate a PAYE scheme.

Those Directors that do operate a PAYE scheme, i.e. having to run a payroll each month and sending RTI to HMRC are eligible to claim.

This will mean though that you can’t be operating within the business in order to grow or generate revenue. You will be allowed to complete statutory duties in line with Directorship but that is all.

What to do if you want to claim

Once the HMRC portal is up and running you will be able to submit your claims either shortly before or during the running of your payroll.

The information you will need will be;

- Your employers PAYE reference number (eg. 123/AB45678)

- The number of employees being furloughed

- The claim period (start and end date), you will be able to backdate to 01 March 2020 if applicable

- The amount claimed (unclear at the moment whether this will need to be total or per employee)

- Bank account and sort code

- Contact name

- Telephone number

What is also unclear at the moment is whether your agent can do this on your behalf or whether it’s something you will need to do as the employer.

You / your agent is also responsible for calculating the 80% you will need to claim.

HMRC will check the claim and if eligible will make a BACS payment directly to your bank account. They have also made it explicitly clear that they reserve the right to audit, in full, any claims you make.

You can also decide to pay the employee 100% of their wages which means this would cost the business the 20% not covered by the grant.

If you have any queries or would like to discuss anything included in the above, please don’t hesitate to get in touch.

Kind regards

Laura

COVID-19 Update for Self-Employed

Following on from my earlier guidance, we have now received some clarity over what support is available for those workers classed as self-employed.

Self-employed grants
It has now been announced that the self-employed will receive a taxable grant from HMRC which will be an amount of the average monthly profit you’ve made over the last three tax years up to the tax year ended April 2019, up to a maximum of £2,500 per month.

You are eligible for the grant if;

-     You’re a self employed individual or member of a partnership

-     You’ve submitted a tax return for the tax year 2018/19 (Should have been submitted in Jan 2020)

-     You traded in the year from April 2019 – March 2020

-     You are currently still trading or would be if not for COVID-19

-     You intend to continue to trade in the tax year April 2020 – March 2021

-     Have lost trading / partnership profits due to COVID-19

-     Your trading PROFIT (not turnover), is less than £50,000 and makes up more than 50% of your total income (i.e. if you are employed by someone as well, your self-employed profit must be more than your employed income)

-     If you haven’t been trading as self-employed for the full three tax years but DID have a return for 2018/19 then you will still qualify and they will take your average profit from the years available (whether this is one, two or three years).

-     If you’ve not submitted your tax return yet for the 2018/19 tax year you have four weeks from today to do so for you to be eligible for this.  The deadline is 23 April 2020.

HMRC will contact you if you are eligible for the scheme.

We expect the scheme to be up and running from the end of June 2020, although there is some speculation it could be as early as the beginning of June.  This will be backdated and available currently for a period of three months.

For those of you currently without any income, there doesn’t appear to be any reason you cannot also apply for Universal Credit and still be eligible for this scheme although I will clarify that as soon as I am able.

Who it will not cover;

Unfortunately, the definition of self employed WILL NOT cover those small limited companies where Directors are paid via both salary and dividend.  The best option we have with this is to either furlough the Director and claim 80% of the small salary paid or look at claiming Universal Credit.

Universal Credit is currently £317.82 per month if you’re over 25 with an added amount for children.  It will depend on your individual circumstances as to which option is best for you.  To note this is subject to change based upon the revised UC provided by the government so is likely to increase.

If you are currently taking the maximum NI efficient salary from a company of £719/month this would equate to £575/month claimed back under furlough.

Those who are newly self-employed.  If you are recently self employed and haven’t yet submitted a tax return, unfortunately the grant will not be available to you.  As discussed in the previous update, we will have to look at other options, such as Universal Credit in order to get you some income.

Other information

To note that with this grant, if you have work, you can continue to work and still claim this grant.

This will be taxable, so any grant money received will need to be input on your 2020/21 self-assessment return and paid by 31 January 2022.

If you claim tax credits, you will need to declare the grant as income on your claim.

You will NOT be able to include your 2019/20 tax return earnings in the calculation for the grant.

Further updates

Since the previous update, we have also received notice that Companies House are allowing companies to defer accounts filing deadlines for a period of three months.  You DO have to apply to Companies House for this, we will help you do that if you need to.

If you are late filing your 2018/19 self-assessment return, please let us know and we will help
you meet the new deadline for consideration of this grant.

Also where you are a CIS contractor due for a rebate, we appreciate you will want to get this filed as quickly as possible, we are expecting HMRC to be efficient in processing these rebates so please let us know if we can help with that.

We appreciate that these are very difficult times for all of us, we’d be happy to discuss any questions you may have on the above, or anything else that we can help you with.

I hope you’re all doing as well as you can be.

Stay safe people.

Laura

COVID-19 Support for Small Business and Self Employed

Firstly, I hope you’re all safe and well and dealing as well as possible with these most uncertain times.  With many businesses now unable to trade, continuing income and payment for employees is a significant concern.  As I’m sure you’re now aware there are certain measures that the government have introduced to
assist with some of these payments. Listed below are the current scheme available to small business and the
self-employed.  Please do not hesitate to contact me for further information on anything included below. Please also note that we will update this as we get further information.

Small business measures

-     VAT

VAT payments due between the 20 March 2020 and 30 June 2020 will be automatically deferred by HMRC.  YOU DO NOT NEED TO APPLY FOR THIS.  The VAT returns will still need to be submitted on time during this period, but no payment will be necessary.  It is not clear at the moment whether HMRC will have the capacity to stop active direct debits, so it may be worth cancelling your direct debit payment and then setting it back up once things have returned to normal.  Any deferred VAT payments will need to be cleared by 05 April 2021.  This may be subject to change dependent on how long the situation continues.

-     Corporation tax

There has been no official guidance on corporation tax specifically, however HMRC when spoken to, are deferring payments due between 31 March 2020 and 30 April 2020, this seems to be on an ad hoc basis at
the moment but please call HMRC if you have a corporation tax payment due in this window.  Unfortunately, as your agents we cannot agree a payment schedule with HMRC, it must be done directly
with a Director / Stakeholder of the company.

-     Income Tax /Self-Assessment

For those with a payment on account due to HMRC on 31 July 2020 this will no longer be payable and is automatically deferred until 31 January 2021.  Again, you do not need to apply for this.  There will also be no
penalties for late payments or interest charged on any balances outstanding during this period.

-     Sick pay for employees

You will be able to reclaim statutory sick pay (SSP) for up to two weeks per employee who has been off work because of COVID-19. Access to the scheme will be via rebate, however we have no further details on how this will be administered at the moment.

-     Job retention scheme

If your employees can no longer work, due to the business being closed, or their specific role is no longer viable, then you are able to designate that employee as ‘furloughed’.  This means that they are still employed by you and that their job will be available to them upon recommencement of the business.  HMRC will reimburse you 80% of the furloughed workers wage costs up to a maximum of £2,500 per employee per
month.  We currently understand this to include PAYE and both employers and employees national insurance.  We also understand that there is currently no obligation by you to pay the remaining 20% of wage costs in order to make use of this scheme.

HMRC are currently working to set up this scheme but as of 24 March 2020, nothing is live yet. There will be an online portal set up to designate workers as furloughed and as yet we have no information as to how the reimbursements will be paid to you from HMRC.

-     Those in Retail, Hospitality and Leisure industries

If you pay business rates, or receive small business rates relief, you will automatically be eligible for a business rates holiday for the 2020/21 tax year, this will be applied by the local council and you do not have to do anything in order to benefit from this.

-     Cash grants for businesses

• Retail, Hospitality and Leisure businesses – If your business falls in to one of these categories then you will be eligible for a cash grant of up to £25,000.  The criteria for these grants are;

•   If the rateable value of your property is between £15,000 and £51,000 then a grant of £25,000 is payable

• If the rateable value of your property is less than £15,000 then a grant of £10,000 is payable
  

Again, you do not have to apply for this, your local authority will contact you in writing to let you know that you are eligible for the grant.  Please contact your local authority if you have any questions about eligibility or you’re unsure of your current rateable value.

• Any other business with business rates – If your business operates from a property that pays
  business rates, even if you pay £nil rates as a result of small business rates
  relief, you are eligible for a cash grant of £10,000.

Again, you do not have to apply for this, your local authority will contact you in writing to let you know that you are eligible for the grant.  Please contact your local authority if you have any questions about eligibility or you’re unsure of your current rateable value.

With these grants, we have been given no timescale for these payments, only that the local authorities will be contacting business owners as soon as possible. 

-     Business interruption loan scheme

There are loans available through 40 accredited finance providers, but I would advise to speak with your bank in the first instance.  These loans are being provided with an initial interest free period of 12 months.

However, with this scheme, lenders will in the first instance try and provide you with a standard loan if you meet the eligibility of finance criteria they already have.  These will be different for each lender.  They will only be able to offer the government assured loan if you cannot meet these criteria for any reason (i.e.
poor credit).  A lot of these loans will be packaged as standard business loans and incur interest and fees in the same way as usual.  You will likely have to provide information about your business, and it’s expected trade (such as business plans or cash flow forecasts).  The list of accredited lenders can be found here;

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/accredited-lenders/

If you would like some more assistance with applications and provision of information to lenders than please let me know and I will assist where possible.

Current help for employees or those self employed

-     If you are employed

If you are employed, you are eligible to claim statutory sick pay even if you are staying at home because of Covid-19 and not currently ill.  You would get £94.25 per week from your employer (as a minimum, each workplace will have their own policy) for a maximum of 28 weeks.  You are also now eligible to claim SSP from day one of staying at home rather than day five.  This has been backdated to 13 March 2020.

-     If you are self employed

If you’re not employed you can’t claim SSP, but you will be able to claim Universal Credit or Employment and Support Allowance.

I appreciate this is not a lot and although we are being told they are relaxing the criteria for universal credit applications, we have not yet seen this in practice.

Potential support for self-employed workers

We are currently expecting the government to outline a package to support self employed workers
which will be released over the coming days.  This is likely to take a similar form to the furloughed workers
provision and cover up to 80% of average monthly earnings.

This is currently speculation, but again we expect this ‘average’ figure to be taken from your
last three self-assessment returns.  We are not currently sure what this means for the recently self employed (i.e. those who have yet to file a return).  I suspect for those of you who are recently self-employed, we may have to file your first tax return sooner than anticipated.

We also don’t know whether this will be applicable for small company directors, where their
earnings are split between salary and dividend. 

We will continue to monitor the announcements and make an update to this guidance as soon as we
have any further information.

Small Company Directors

Where you are a small company director currently being paid by both salary and dividend, and your business is currently not operating, we can look at furloughing you as an employee which would mean that at least we can reclaim 80% of the salary that has been paid.

Other Information

We would like to note that although HMRC have suspended payments for the majority of tax schemes for the current periods, any VAT returns, Corporation Tax returns, PAYE RTI and Companies House documentation continue to be required to be filed at the correct times.

We appreciate that these are very difficult times for all of us, we’d be happy to discuss any questions you may have on the above, or anything else that we can help you with.

Stay safe everyone.

Laura

When is an accountant not an accountant?

Scarily, absolutely anyone can call themselves an accountant. There’s no regulation which says you have to have any qualification, technical experience or indemnity insurance in order to trade as an accountant. Terrifying right? I mean, not as terrifying as having an unqualified, inexperienced, uninsured brain surgeon operate on you but still….

Now don’t me wrong, on the flip side of that, there are an awful lot of us who have worked really hard to get our qualifications and spent years building up our technical knowledge and experience.

There are a few things that you can look out for to reassure yourself though;

• If an accountant is advertising as a Chartered Accountant (ACA), then they should be a member of either the ICAEW or ICAS, which means you can find their details on either organisations ‘find a chartered accountant’ pages

• This will be the same if you see CIMA or ACCA as their qualification. You might also see some variations on these such as FCA, FCCA or FCMA.

• These organisations ensure their members meet certain professional and ethical standards, and will offer you a place to turn if you’re not happy with the standard of the work done, or advice offered by your accountant

If it’s not clear, don’t be afraid to ask what professional body they are a member of, any accountant should be more than happy to talk about their experience and qualifications.

If you would like to talk about anything in this article, please don’t hesitate to get in touch with us either via the website or contact laura@thealternativeaccountants.co.uk