Update 6th April 2020
Further Details of Job Retention Scheme Announced
The government has provided further information in relation to the Coronavirus Job Retention Scheme (CJRS) in response to the most commonly raised queries. The full update can be found here: https://www.gov.uk/guidance/cl...
Some key points are:
- *to make a claim an employer must have enrolled for PAYE online*
- directors are able to be furloughed
- employees must be furloughed for a minimum period of 3 weeks at a time
- employers must confirm in writing to their employees that they have been furloughed and a record of this communication must be kept for 5 years
- some classes of individual who are not employees may be eligible. These include:
- office holders (including company directors)
- salaried members of Limited Liability Partnerships (LLPs)
- agency workers (including those employed by umbrella companies)
- limb (b) workers
- normal rules apply for employees on maternity leave, paternity leave, adoption leave or shared parental leave
- 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
- 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
HMRC will retain the right to retrospectively audit all aspects of your claim.
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.
If you require further advice or assistance in relation to this or any of the other business support schemes set up by the government in response to the coronavirus crisis please contact us on 01942 760500 or email@example.com
Update 3rd April 2020
Coronavirus Statutory Sick Pay Rebate Scheme
HMRC has announced further details and guidance in relation to the SSP rebate scheme. These are as follows:
- The Coronavirus Statutory Sick Pay Rebate Scheme will repay employers the current rate of SSP that they pay to current or former employees for periods of sickness starting on or after 13 March 2020.
- Employers who pay more than the current rate of SSP can only claim the current rate amount.
- The repayment will cover up to 2 weeks starting from the first day of sickness, if an employee is unable to work because they either:
- have coronavirus
- cannot work because they are self-isolating at home
- Employees do not have to provide a doctor’s fit note for a claim to be made
Who can use the scheme
The scheme can be used by employers if they:
- are claiming for an employee who’s eligible for sick pay due to coronavirus
- had a PAYE payroll scheme that was created and started on or before 28 February 2020
- had fewer than 250 employees on 28 February 2020
The scheme covers all types of employment contracts, including:
- full-time employees
- part-time employees
- employees on agency contracts
- employees on flexible or zero-hour contracts
HMRC will advise when the scheme will end.
Connected companies and charities
Connected companies and charities can also use the scheme if their total combined number of PAYE employees are fewer than 250 on or before 28 February 2020.
Records employers must keep
Employers must keep records of all the statutory sick payments that they want to claim from HMRC, including:
- the reason why an employee could not work
- details of each period when an employee could not work, including start and end dates
- details of the SSP qualifying days when an employee could not work
- National Insurance numbers of all employees who SSP has been paid to
Employers will have to keep these records for at least 3 years following a claim.
The online service through which the SSP can be reclaimed is not yet available.
Update 27th March 2020
Self-Employment Income Support Scheme
The government has now announced new measures designed to provide support for the self-employed, including members of a partnership, who have been adversely affected by Covid-19.
Full details of the scheme can be found here:
The main points are:
- Applications cannot be made yet. HMRC will contact you if you are eligible for the scheme and invite you to apply online
- Access to the scheme is ONLY through GOV.UK.
- Claims can be for a taxable grant worth 80% of trading profits up to a maximum of £2500 per month for the next 3 months. This term may be extended if necessary
- Applicants will be self-employed individuals or members of a partnership
- Applicants must have submitted their self-assessment tax return for 2018-2019; if not then it must be submitted by 23rd April 2020
- Applicants must be trading when they apply or would be except for Covid-19 and intend to continue trading in tax year 2020-2021
- Applicants must have lost profits due to Covid-19
- Self-employed trading profits must be less than £50000 and more than 50% of income from self-employment
- Grants will be calculated from the average profits for tax years 2016-2017, 2017-2018 and 2018-2019 (where applicable) and will be paid in one instalment directly into the Applicant’s bank account
If anyone contacts you claiming to be from HMRC saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam. HMRC are not expecting to make any payments to the self-employed until June so will not help immediate cash flow difficulties.
Update 19th March 2020
You may have heard the announcements about the government’s proposals to help businesses affected by Covid-19. They include a package of measures to support businesses including:
- a 12-month business rates holiday for all retail, hospitality and leisure businesses in England
- small business grant funding of £10,000 for all businesses in receipt of small business rate relief or rural rate relief
- grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
- the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
- a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
- the HMRC Time To Pay Scheme, details of which can be found here: - https://www.gov.uk/government/news/tax-helpline-to-support-businesses-affected-by-coronavirus-covid-19
The exact details of how these schemes will work are still being developed but it looks likely that the grant funding and rates holidays will be offered by the local authority and that they will contact those businesses eligible for support directly, once the government has made this funding available to local authorities, expected to be some time in April.
More details of the Business Interruption Loan Scheme are available by following the link at https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils/ It is likely that that businesses’ own banks will offer the loans but we have no details of the terms under which they will be offered. We do know that the scheme provides the lender with a government-backed guarantee against the outstanding facility balance, potentially enabling a ‘no’ credit decision from a lender to become a ‘yes’, but the borrower always remains 100% liable for the debt.
Regarding SSP, the government have confirmed that SSP will be payable to employees from Day 1 of their sickness absence due to Covid-19 rather than on the 4th day. Employers who employ fewer than 250 employees will be able to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows:
- this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19
- employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of COVID-19
- employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note
- the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible.
So although it looks as if businesses will be able to reclaim some SSP, the mechanism by which the claim will be made has not yet been announced.
We’ll keep our clients posted as soon as we learn more details.
If you have any specific or urgent concerns in relation to the impact of Covid-19 on your business and how this may be mitigated then please contact us and we will do all we can to assist you.