Coronavirus

On 27th April, the Chancellor announced a new fast-track loan scheme with 100% government-backed guarantee for lenders which will launch on the 4th May. 

• Businesses can now borrow between £2,000 and £50,000 for up to six years with no repayments due in the first twelve months.
• Loans will also be interest free for the first twelve months.
• There are eleven lenders participating in the scheme, you should approach a suitable lender via their website.
• Lenders will ask eligible businesses to apply online through a short and simple online application form.
• You cannot apply if you’re already claiming under the CBILS, however if you’ve already received a loan of up to £50,000 under CBILS and would like to transfer it into the Bounce Back Loan scheme, you can arrange this with your lender until 4th November 2020.

The government has announced support to help all UK businesses retain staff that would otherwise have been laid off during this crisis.

HMRC will reimburse 80% of any furloughed workers wage costs up to a cap of £2,500 per month from 1st March 2020 for 5 months. The scheme can include workers who were included in an RTI submission to HMRC on or before the 19th March 2020, including those on zero hour or temporary contracts.

A furloughed worker is on temporary paid leave and not allowed to work for the employer during this time.

If you employ someone with two jobs, you can still put them on furlough whilst they continue to work for another company, if it is permitted within their employment contract.

Employees must be furloughed for a minimum of three weeks up to the 30th June, however you can place an employee on furlough more than once whilst the scheme is open. 

From the 1st July 2020 onwards, businesses will be given the flexibility to bring back workers part time for example, they  can furlough employees 2 days per week and have them working three days per week. The employer will be responsible for paying the wages for the hours the employee works whilst the government will cover 80% of wages for the hours the employee does not work. 

The government scheme will now run for a further three months until the 31st October 2020 but with employers being required to meet part of the employment costs of their furloughed workers during these months. The flexible furlough rules above will still apply. 

In August, the employer will have to pay for the Employer NI contributions and pension contributions. In September, the employer will have to pay for the Employer NI contributions, pension contributions and 10% wages. In October, the employer will have to pay for the Employer NI contributions, pension contributions and 20% wages. 

In addition, the last date to furlough an employee for the first time is the 10th June, so that they meet the minimum 3 week requirement by the 30th June. Employees can only be on furlough from July – October if they have already been furloughed prior to the the 30th June. The deadline to make your first furlough claim is the 31st July. 

Further guidance on how to calculate the furlough claims using the new flexible furlough rules (applicable for claims from the 1st July 2020 onwards) will be made available from the 12th June. 

The amount you can claim up to the 30th June

– The lower of 80% of an employee’s regular wage or £2,500 per month, plus the associated Employer National Insurance contributions and minimum employer pension contributions.

– If your furloughed employees have been in employment for more than a year and their pay varies monthly, you can claim the higher of:

– the amount you paid them in the same month last year

– an average of their monthly earnings from the 2019-20 tax year

– If you have an employee who has worked for less than a year, you can claim for the average of their monthly earnings since they started work. The same arrangements apply if their pay varies monthly such as if they are on a zero-hour contract.

– Bonuses, commissions and fees are not included as part of monthly earnings

– Employer National Insurance contributions cannot be claimed if due to the employment allowance you have no Employer NI due in the pay period you are claiming. 

– The most amount you can claim per employee in March 2020 is £2500 + £245 (Employers NI) + £59 (pension contribution) = £2804

 – Click here for detailed guidance if you are unsure about how to calculate your claim, or please get in touch with us and we would be happy to help.

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 the following information to HMRC about the employees that have been furloughed:

– your PAYE reference number or Company UTR number if you submit a tax return. 

– the number of employees being furloughed

– the claim period (start and end date)

– amount claimed (per the minimum length of furloughing of 3 weeks)

– your UK 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.

The portal to submit your claim is now live 

All small and medium sized employers (less than 250 employees as at the 28^th February 2020) with a PAYE payroll scheme in place at the 28th February, will be able to reclaim Statutory Sick Pay (SSP) for absences 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 (including directors) 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 eligible period for the scheme commenced 13th March 2020.

– the scheme will launch online on 26th May 2020. 

–  A business rates discount of 100% is available in England for the 2020 to 2021 tax year for companies in the retail, leisure and hospitality sectors.

–  For companies in those sectors with a rateable value of more than £15,000 and less than £51,000 there will now be a cash grant of up to £25,000 available. 

–  For companies eligible for Small Business Rate Relief (i.e. your property rateable value is less than £15,000) the grant available has been increased from £3,000 to £10,000. These businesses will not need to apply for grant funding, you will be contacted by your local authority.

– A discretionary fund has also been set up to accommodate small businesses previously outside the scope of the above business grants. Businesses must be small, under 50 employees and be able to demonstrate a significant drop of income due to coronavirus restriction measures. 

–  Enquiries on eligibility for, or provision of, the reliefs should be directed to the relevant local authority.

–  The Coronavirus Business Interruption Loan Scheme, delivered by the British Business Bank, is supposed to launch on 23^rd March to support businesses to access bank lending and overdrafts. 

–  The government will cover loans of up to £5m with a guarantee of 80% from the government.  

–  No interest is due on the loans for the first 12 months.  

–  The borrower remains liable for 100% of the debt.

– No personal guarantee is required for loans up to £250k.

–  Please contact your lender as soon as possible if you are looking to apply for one of these loans. Businesses will be able to get finance under the scheme from many providers, including the main high street banks.

Click here for more information about Coronavirus Business Interruption Loan Scheme.

–  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. However, if you pay by direct debit, remember to cancel this with your bank so that HMRC do not automatically collect the payment. 

–  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.

–  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.

–  All businesses and self-employed people in financial distress, and with outstanding tax liabilities, may be eligible to receive support with their tax affairs through HMRC’s Time To Pay service. These arrangements are agreed on a case-by-case basis and are tailored to individual circumstances and liabilities.

–  Unfortunately, we cannot call this line for you, HMRC will insist on speaking to the business owner.  Our advice is to call early as HMRC becomes busier throughout the day.

–  It is important to get upfront agreement from HMRC before a payment deadline.

HMRC’s dedicated helpline is: 0800 0159 559.

–  Mortgage providers are expected to provide at least a 3-month mortgage ‘holiday’ for those affected by the coronavirus.

–  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 rent payment holiday from their landlord.

–  No one can be evicted from their home or have their home repossessed over the next three months.