We are now several weeks on from Chancellor Rishi Sunak’s first Coronavirus business support statement and to me at least, what seems like a lifetime away from his first budget.
Based on the many questions we have been asked over the past fortnight, we have prepared a frequently asked questions release of our newsletter. We have chosen three of the most popular topics to focus upon and we hope you find these useful.
- Employers and the Coronavirus Job Retention Scheme
- Help for the self employed
- Coronavirus small business grant funding scheme
As always, please feel free to share this with any one you believe has unanswered questions about the support available to their business. We are here to try and lower the stress in what are very challenging and uncertain times.
Please remember that we are also happy to answer any questions you may have, and you are welcome to contact us.
Employers and the Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme (CJRS) has been announced where all UK employers with a PAYE scheme will be able to access support to continue paying part of their employees’ salary for those who would otherwise have been laid off during this crisis.
Q. What is it and who is covered?
A. Essentially CJRS will be a government grant. The idea is to reimburse employers for 80% of a “furloughed worker’s” wages or salary, up to a maximum of £2,500 per month. Employers may choose to top up the remaining 20%, but they are under no obligation to do so.
Full time, part time, employees on agency contracts and employees on flexible or zero hours contract are eligible.
Q. Has the portal been opened yet to register furloughed employees?
A. No, we are still waiting for confirmation as to when this will happen.
Q. I pay myself through my own limited company through a combination of salary and dividends, can I claim for both if I am furloughed?
A. No, I’m afraid that dividends are not included in the calculation for salary when assessing support through the furlough scheme.
Q. I am on a zero hours contract, how will my furlough be calculated?
A. If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:
- the same month’s earning from the previous year
- average monthly earnings from the 2019-20 tax year
- If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.
If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.
Q. I am a director, can I be furloughed?
A. This can be a difficult decision as one could argue that a director is always working because of their status as an officer of the company. However, we believe that, as long as all you are doing is performing basic administrative tasks and complying with your statutory duties as a director, (such as filing accounts) then you may still be furloughed.
Q. I receive a relatively small basic salary and most of my income is made up of bonuses. Is my furlough calculation based on the total of both?
A. Unfortunately, the furlough calculation is based on your basic salary, and should not include bonus payments.
Q. What if the 80% of wages falls below the National Minimum Wage
A. If an employee is furloughed, they are not working and hence the minimum wages levels do not apply, because they are not working. You must pay at least the NMW for any work-based training they undertake, however.
Q. Can employees work for someone else whilst on furlough?
A. This will depend on your contracts of employment if you allow you staff to have a second job. They remain employed by you whilst they are furloughed.
Q. What if the employee has more than one job?
A. Each is considered separately. They can be furloughed by either employer or both.
Q. What about PAYE and National Insurance?
A. Wages will be subject to PAYE and NI deductions as usual. Employers will be liable for Employers NI and Employers Pension unless the employee has opted out.
Help for the Self-employed
The Self-employment Income Support Scheme will provide grants to self-employed individuals or partnerships negatively impacted by COVID-19, worth 80% of their profits up to a cap of £2,500 per month.
Q. Am I eligible for the scheme?
A. To be eligible you must have:
- Carried out a self-employed trade during 2018/19 tax year and have filed your tax return
- Continued that self-employed trade in the current 2019/20 tax year (accepting you may currently have suspended trading due to coronavirus)
- Be intending to continue that self-employed trade in 2020/21 tax year
- Have lost trading profits due to COVID-19
In addition your average self-employed profits over the three years 2016/17, 2017/18 and 2018/19 (since commencement if later) must:
- Represent at least half of your total taxable income, and
- Not exceed £50,000
Q. How and when will I be paid the money?
A. It is believed HMRC will contact self-employed tax payers directly who qualify for the scheme. You will need to let HMRC have your bank details so they can remit the money to your account. It is anticipated that the money will be paid in a three month lump sum in June 2020.
Q. June 2020 is too long to wait for the money, what else can I do?
A. The government believes that a combination of the following measures will help self-employed people through this difficult time:
- Self-employed people can apply for Universal Credit
- Mortgage holidays of three months have been offered (they will charge you more interest overall and your payments may change when they start being made again)
- Protection from eviction during the crisis (but any rent not paid is still owed)
- VAT payment deferral for payments due up to 30 June 2020 (but they must be paid by 31 March 2021)
- The second payment on account for income tax due on 31 July 2020 have been deferred (though the balance must be paid by 31 January 2021)
Coronavirus Business Interruption Loans criteria has been extended to include availability to the self-employed.
Q. I’m still working – am I eligible?
A. Yes. The grant is not conditional on work having ceased entirely, only on you having lost profits as a consequence of the pandemic. So, if you are still working but earning less than you would have been, you can still claim.
Q. I’m recently self-employed – am I eligible?
A. If you commenced self-employment on or after 6 April 2019 then I’m afraid the answer is no. You will have to consider applying for Universal Credit.
Q. My Tax Return for the tax year ended 5 April 2019 is late, can I still be eligible for the scheme?
A. Yes, the Chancellor announced a 4 week window, ending 23 April 2020, for those whose 2018/19 tax return is overdue. Taxpayers who file their returns by this date will be eligible. Assuming they meet the other criteria.
Coronavirus – Small Business Grant Scheme Funding
The government will provide additional Small Business Grant Scheme funding for local authorities to support small businesses that already pay little or no business rates because of small business rate relief (SBRR), rural rate relief (RRR) and tapered relief. This will provide a one-off grant of £10,000 to eligible businesses to help meet their ongoing business costs.
Q. Who will administer this scheme?
A. The scheme will be administered by local authorities as they have the list of qualifying businesses based on rates relief.
Q. Can I qualify if I work from home?
A. As the scheme stand now, the answer is no. The business needs to be one that occupies property.
Q. At what point did I need to be in receipt of small business rates relief?
A. On 11 March 2020.
Q. Where do I have to be based to qualify?
A. Anywhere in England.
Q. How do I apply?
A. Advice given is that local authorities will contact you if you qualify. However, we note that a number of local authorities now have dedicated webpages on their website with online application forms to expedite the process.
Q. When will I get paid the grant?
A. Local authorities are looking to pay the grants as quickly as they can from early April 2020.
Q. My business is based in a business centre and I don’t think I receive a separate rates bill, can I apply?
A. We would suggest that you contact the council and explain your situation. They may ask you for a copy of your lease agreement with the business centre and copy invoices and your case will be considered. Anecdotally we know of several businesses undertaking this process at the moment and the feedback from the local authority has been favourable.
Q. My business is based in the retail, hospitality or leisure sector, is there a grant for me?
A. Yes, the Retail and Hospitality Grant Scheme provides businesses in the retail, hospitality and leisure sectors with a cash grant of up to £25,000 per property.
Businesses in these sectors with a property that has a rateable value of up to £15,000 may be eligible for a grant of £10,000.
Businesses in these sectors with a property that has a rateable value of over £15,000 and less than £51,000 may be eligible for a grant of £25,000.
The local authority should contact you if you are eligible for this grant, though you may choose to contact them to move matters forward more quickly.