The Government has announced a package of new measures aimed at helping workers affected by the ongoing coronavirus crisis.
The new Job Support Scheme will replace furlough, starting on 1 November 2020 and lasting six months. To qualify, employees must work at least a third of their normal hours, for which they’ll be paid in full by their employer. For ‘normal hours’ that are not worked, there will be three ways that the cost will be split.
- the state pays a third
- the employer pays a third
- the employee loses a third
Businesses are now given longer to repay bounce back loans. New and existing loans can now be repaid over 10 years, with payment holidays and interest-only repayment periods also available.
How will the new Job Support Scheme work?
Here’s what you need to know:
- The Job Support Scheme will start on 1 November 2020. It will run for six months. The Government will publish more guidance in due course.
- To qualify for the scheme, you must work at least a third of your normal hours. This will be paid in full by your employer.
- For the hours employees can’t work, the cost will be split three ways – and the contribution from the government is capped at just under £700 per month.
It has been confirmed that the employer will still have to cover their national insurance or pension contributions if they are being paid through the scheme.
- The scheme is open to many however not all employers can take part. All small and medium-sized businesses are eligible and larger businesses can take part but must prove they’ve been adversely affected by coronavirus and are unable pay dividends while using the scheme.
- Employers can take part regardless of whether they used the furlough scheme however employees cannot be on a redundancy notice while taking part.
- To be eligible, you must have been on your employer’s PAYE payroll on or before 23 September 2020. That’s the key cut-off date.
- You can go on and off the scheme. The Government says employees will be able to cycle on and off the scheme and do not have to be working the same pattern each month, but each short-term working arrangement must cover a minimum period of seven days.
Businesses given longer to repay bounce back loans
It has been announced that a new ‘Pay As You Grow’ Scheme will allow those who’ve borrowed bounce back loans to have more flexibility in how they repay, while the time you have to apply for a new bounce back loan has also been extended.
- You now have ten years to repay the bounce back loans instead of six.
- You can now take payment holidays and interest-only repayment periods on bounce back loans.
- The deadline has now been extended from the 4th November 2020 to the 30th November 2020.
Other measures to help businesses – including VAT deferral
- Other temporary loan schemes aimed at helping businesses will also be extended. Businesses will now have until 30 November 2020 to apply for the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme and the Future Fund.
- Business can delay VAT payments under the ‘New Payment Scheme’. Instead of paying in full by March 2021, businesses will now be able to spread payments throughout the 2021/22 financial year.
Second SEISS grant explained
To qualify for the second SEISS grant the business must be adversely affected by the coronavirus pandemic on or after 14 July 2020.
The online portal will open for the second SEISS grants on 17th August 2020. The amount of the grant will be calculated at 70% of the taxpayer’s annual average profits, capped at £2,190 per month, and payable for three months.
The other conditions to qualify for the second grant remain the same, please see below to see if you qualify.
The SEISS grant will be payable to taxpayers who meet these conditions:
- registered with HMRC as self-employed
- submitted tax returns for 2016/17 to 2018/19 (or years within that period when trading) which include self-employed trading income
- was trading in 2018/19 and 2019/20.
- is still trading in 2020/21 (or would be if it were not for the coronavirus shutdown)
- has lost trading profits due to coronavirus.
- self-employed profits make at least half of their annual average income.
- average self-employed profits for 2018/19 do not exceed £50,000 and were more than nil or
- average annual self-employed profits for 2016/17 to 2018/19 do not exceed £50,000 and were more than nil.
The main addition to the HMRC guidance for SEISS is further emphasis on the requirement for the business to have been “adversely affected” by the coronavirus pandemic as a pre-condition for claiming the grant.
Accurate recording of the timing of trading conditions and costs for the business will be crucial, as the second SEISS grant can only be claimed if the business is adversely affected on or after 14 July 2020.
To be considered adversely affected, HMRC says a business must have either temporarily stopped trading, or has been scaled back, and it suggests three possible causes for this reduction or cessation in trade as:
- supply chain has been interrupted
- fewer or no customers or clients
- staff were unable to work
Those three categories broadly cover supplies, sales, and staff, but there could be other reasons for a reduction in profits, such as increased costs.
For example, many businesses have had to undertake more cleaning, install screens and signage, and provide protective equipment to staff. The HMRC guidance does not appear to consider these increased costs as being adversely affected, but it certainly would be, as at the margins such cost increases could mean the business is no longer viable.
In addition, HMRC states that the business will have been adversely affected if the owner(s) can’t work because they are:
- shielding themselves or someone else in their household
- on sick leave because of coronavirus; or
- have caring responsibilities because of coronavirus
In all cases, the taxpayer should keep records of how and why they believe their business has been adversely affected, and for which periods.
Continue to work
HMRC emphases that the self-employed taxpayer can continue to work in their business while receiving the SEISS grant, which is in stark contrast to the conditions for directors of their own companies. If directors choose to furlough themselves and claim CJRS for their pay, they must cease all productive work for their company and any connected businesses, while they are furloughed.
Accurate recording of the timing of trading conditions and costs for the business will be crucial, as the second SEISS grant can only be claimed if the business is adversely affected on or after 14 July 2020.
HMRC provides no guidance on how long the period of non-trading must last for, or by what percentage the normal level of trading business has to reduce by, for the business to qualify as adversely affected. One could argue that a cessation of trading for as little as a few days would be enough.
The SEISS grant is taxable income for 2020/21, so the tax will be payable by 31 January 2022.
For construction industry subcontractors, who are used to receiving their income with CIS-tax deducted at 20% or 30%, the SEISS grant will be a cashflow fillip as no tax is deducted at source. This means those CIS subbies may well have tax to pay for 2020/21 rather than be due a tax refund.
Coronavirus Financial Help Update June 15 – Companies
New information for your company and employees.
New Updates on the Furlough Scheme
- There are changes to the scheme and key dates that you need to be aware of
- You can claim if you bring previously furloughed employees back to work part-time from 1 July (known as flexible furloughing) and how many employees you can claim for in any one claim
The Flexi-furlough (FFS)
Just prior to publication of this magazine the government has published updated guidance on the Job Retention Scheme (furlough), setting out the pathway to the phasing out of the scheme. It provides details of the complex mechanism under which flexible furloughing – part-work/part-furlough – will be allowed from 1 July 2020.
- 10 June 2020 will be the last day that employers can place employees on furlough.
- from 1 July, ‘flexible furlough’ is being introduced, meaning employees will be able to work part-time and be furloughed part-time. Businesses will decide how that will work (in terms of the time split).
- from 1 August, employers will have to pay employee’s national insurance contributions and pension contributions and can no longer reclaim them through the CJRS.
- from 1 September, the government will only reimburse 70% of salary (up to a maximum of £2,190). Employers are required to top-up to 80% (or more, depending on what the employer agreed with the employee).
- from 1 October, the government will only reimburse 60% of salary (up to a maximum of £1,875), and employers will continue having to top up to 80% (or more).
- the furlough scheme will close on 31 October 2020.
What you need to do from July
- start your flexible furloughing of employees from 1 July onwards. You can decide the hours and shift patterns they work to suit the needs of your business – you’ll pay their wages for the time they’re in work and can apply for a job retention scheme grant to cover any of their usual hours they are still furloughed for. You can still keep employees on full furlough if you need to
- claim for periods ending on or before 30 June, by 31 July – this is the last date you can make those claims
- claim for further furlough periods as needed – the first time you will be able to make a claim for days in July will be 1 July.
The furlough scheme is complicated and getting more so! I suggest you obtain contact us for further advice for your particular situation.
Do not forget the Bounce Back Loan
Once again it is there for sole traders and companies, so everyone is entitled subject to the eligibility criteria.
- based in the UK
- established before 1 March 2020
- has been adversely impacted by the coronavirus
It is there for all small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.
The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.
Many of my clients have done it and it works and is generally quite speedy.
FINALLY, and this is a big deal….
Protect yourself from scams
“Stay vigilant about scams, which may mimic government messages as a way of appearing authentic and unthreatening. Search ‘scams’ on GOV.UK for information on how to recognise genuine HMRC contact. You can also forward suspicious emails claiming to be from HMRC to firstname.lastname@example.org and texts to 60599”.
Coronavirus Job Retention Scheme – CJRS
- From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time.
- However you will decide the hours and shift patterns your employees will work, on their return.
- Therefore you can decide on the best approach for them, and of course will be responsible for paying their wages while in work.
- From August 2020, the level of government grant provided through the job retention scheme will be slowly tapered to reflect that people will be returning to work. That means that for June and July the government will continue to pay 80% of people’s salaries.
- In the following months, businesses will be asked to contribute a modest share, but crucially individuals will continue to receive that 80% of salary covering the time they are unable to work.
The scheme updates mean that the following will apply for the period people are furloughed:
- June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
- August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
- September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
- October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.
Employers will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked.
- Employees who believe they are not getting their 80% share can also report to the HMRC fraud hotline.
- HMRC will be looking to take action against those found to be abusing the scheme.
You have been warned…
Government ‘bounce back’ loans
On 27 April, the Chancellor announced a new loan scheme which is aimed at supporting micro-businesses.
A micro business is usually defined as a very small business that can be a company or a sole trader. In general, it must have any 2 of the following: a turnover of £632,000 or less. £316,000 or less on its balance sheet. 10 employees or less.
The potential problem is that legislation allows the definition to be set by government depending on what their needs are. This new legislation however is there to pick up the forgotten small ltd company owners who receive their income through dividends and were missed in the self-employed grant legislation. We of course need it to be about small private hire and chauffeur companies who have been devasted by the fallout of the pandemic and have been missed, to give them the same chance as self-employed businesses to have the ability to ‘bounce back’.
This scheme will provide loans of between £2,000 and £50,000 for up to six years. The government will pay any interest on these loans for the first 12 months. No repayments will be due for the first 12 months. The scheme will also provide lenders with a 100% government backed guarantee, unlike the government business interruption loans known as CBILS at 80%
The following businesses are eligible to participate in this scheme…
- Businesses based in the UK
- Those businesses that have been negatively impacted by coronavirus
- Were not classed ‘undertaking in difficulty’ on 31 December 2019
You also can’t apply if you’re already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).
How Can You Get One?
You’ll be able to apply online using a short and simple two-page self-certification. form. Because the loan is entirely Government-backed, lenders will hopefully have the confidence to offer finance without the lengthy and complex red tape associated with CBILS and other loan schemes.
Firms applying for the new loans will only have to prove that they were viable in the past before the corona crisis, not that they will remain viable after the crisis.
The good news is that you will be able to access the cash within days.
There remains some concern that banks will still wish to assess the latest financials through a ‘cash available to service debt’ calculation. Where there isn’t sufficient cash to service the debt, there are fears that the loan may still not be granted despite the Government guarantee. Further clarification is expected from the government soon.
The scheme has been designed especially for small firms, including sole traders, that require ‘vital cash injections’ to help them operate during these challenging times. It will launch for applications from 9am on Monday 4 May and the loans will be provided through a network of accredited lenders.
The Government said that loans will be ‘advanced as quickly as possible’ and that they will agree a ‘low standardised level of interest for the remaining period of the loan’.
Rishi Sunak said the scheme will help bolster the existing package of support available to the smallest businesses affected by the coronavirus pandemic.
Words from The Government
The Chancellor of the Exchequer, Rishi Sunak, said:
‘Our smallest businesses are the backbone of our economy and play a vital role in their communities. This new rapid loan scheme will help ensure they get the finance they need quickly to help survive this crisis.
This is in addition to business grants, tax deferrals, and the job retention scheme, which are already helping to support hundreds of thousands of small businesses.’
Business Secretary Alok Sharma said:
‘Our small businesses are vital in ensuring our communities thrive and will be crucial in creating jobs and securing economic growth as we recover.’
Important information relating to the Self-Employed Income Support Scheme
Let’s just hope that it won’t have any hidden problems with the new loan scheme. The news just in on the Self-Employed Grant Is.
- Accountants at the moment, will not be able to make the claim on behalf of their clients. You will have to sign up to the government gateway in order to access the claim.
- This will make the process a bit complicated and scary for many people Please then get your government gateway access as soon as possible or ask your accountant to help you get it. if you think you are likely to be able to claim.
- WE are not supposed to file the claim under your credentials either Thankfully we are still awaiting further detailed on registering and many of our professional associations are lobbying hard to allow us to actually give you guys hands on help to do this.
Lots to think about and help to get for all driver sand small private hire businesses, you can go to our website for more help on Eazitax.co.uk/blog/coronavirus.
Take a look at our other Coronavirus articles and advice
The Eazitax emergency blog
Let’s start with the fact that as we go to press the COVID-19 virus is just really taking hold in the UK and a lockdown is underway. So, we can’t avoid talking about it because from a business perspective, over and above the human tragedy, the main thing I have been dealing with is the current effect that it has on our clients.
Firstly, I would say that hopefully every well run business should have contingency plans in place. Sorry to those who know me and who have heard it before, but personally and commercially always have three months money set aside. Please don’t hate me for saying it now, but older airport transfer companies should have learnt from the 2010 eruptions of Eyjafjallajökull in Iceland which threw ash out and decimated the controlled airspace of Europe, resulting in the largest air-traffic shut-down since World War II. However, I like many people sometimes get it wrong, and hey, it was 10 years ago!
So, let’s look at what should be keeping us awake at night now, and some practical help, I hope.
Firstly, the budget has addressed the issue in part. The initial focus was on the short-term measures needed to deal with the challenges the UK faces as a result of the pandemic. These amounted to a monetary injection offering direct help, which seems to grow with every press conference, with more available if required, but for both businesses and individuals.
For the coming year, statutory sick pay will be available to more people and so will some other social security benefits. Business rates will be reduced or even eliminated for some smaller businesses – at least in the short term.
Small firms will be able to access ‘business interruption’ loans, up to £5million with the first 6 months being interest free. and there will be an improved ‘Time to Pay’ arrangements to help taxpayers affected by COVID-19. Although we still need further details remember this when dealing with HMRC a promise of ‘understanding’ has come from the top. Other immediate support initiatives for smaller businesses include greater access to bank lending, this is worth talking to your bank straightaway and quoting our chancellor now.
The budget was very different, as a result of hurried inclusion of the COVID-19 position. Rishi Sunak did focus on stability and security very early on, together with detailed measures which are very specific to the current situation.
Worst Case Scenario
So now let’s look at preparation for the worst.
Always share your burden. If you have asset finance, contact them as soon as possible and negotiate, and when I say negotiate it is important when dealing with all large corporations, financial institutions and government departments to be the thorn in their side and not let them be the thorn in yours.
There is a story from the old country (Hackney) which tells of a man who was keeping his wife awake by sitting on their bed late at night moaning and wailing. His wife says to him what is the matter, that keeps you awake late into the night? He tells his wife that he owes their neighbour £200 and that he hasn’t got it to give. His wife says to him, that’s an easy one to fix. She opens the window and calls to the neighbour waking him up. She calls to him and tells him that her husband hasn’t got the £200 for him and closes the window. She turns to her husband and says, right now you go to sleep and ley him lay awake worrying. This joke is not a joke though, this is how we should deal with creditors, love and respect them but share the burden!!
the only good thing about a national crisis is that you are not alone, and the economy needs to survive.
There is plenty of advice available for company owners in stressful situations like this, but they usually engender difficult decisions. Th earlier you address it statistically the greater chance of saving the business as a going concern.
You need to plan for reconstruction and recovery. All businesses no matter what size need to make difficult decisions. Most companies in the past that have been saved from insolvency have involved early procedures put in place. Suitably restructured and with a cashflow, means sometimes negotiated debt payments and possibly, unfortunately with a reduced workforce.
Make sure that you are up to speed with government guidance including the COVID-19: guidance for employers and businesses factsheet.
This Budget paper advises what needs to be done if Coronavirus is suspected among any members of staff and details the financial measures that are being made available including:
- Refund for businesses and employers required to access Statutory Sick Pay
- A 100% Business Rates retail discount for one year
- Funding support for those small businesses that pay little or no Business Rates because of Small Business Rate Relief
- The Coronavirus Business Interruption Loan Scheme
- Mortgage payments will be frozen for 3 months to those in difficulty
- A total of £330 billion for businesses needing cash, no news on sole traders yet
- The Chancellor will report on his meeting with the transport minister today
- The business rates are being suspended
- A statutory sick pay relief package for SMEs
- Small business grant funding of £10,000 for all business in receipt of Small Business Rates Relief (SBRR) and Rural Rates Relief
- The Coronavirus Business Interruption Loan Scheme to support long-term viable businesses who may need to respond to cash-flow pressures by seeking additional finance
- The HMRC Time To Pay Scheme
I wish everyone well during these difficult times and please can I make this call to look after your mental good health as well as your financial one in these troubling times.
How Covid-19 affects you as a Limited Company and what assistance there is out there for you
Coronavirus Job Retention Scheme
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.
You will need to cancel any direct debits in place, if this is your method of payment.
HMRC Time to 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
The rates holiday and cash grants will be administered by local authorities and should be delivered automatically, without businesses needing to claim.
Coronavirus Business Interruption Loan Scheme
These are available from Monday 23 March
These can now be applied for via your own bank either by phone or online.
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.
Insurance policies differ significantly, so businesses should check the terms and conditions of their specific policy and contact their providers.
Statutory Sick Pay (SSP)
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.
Companies House – Accounts filing
businesses will be able to apply for a 3-month extension for filing their accounts.
. Under normal circumstances, companies that file accounts late are issued with an automatic penalty.
As part of the agreed measures, while companies will still have to apply for the 3-month extension to be granted, those citing issues around COVID-19 will be automatically and immediately granted an extension. Applications can be made through a fast-tracked online system which will take just 15 minutes to complete.
HMRC – Filing Corporation Tax Returns
Companies still need to file their Corporation Tax Returns on time
This is a summary of what affect the Covid -19 virus might have on your Limited Company business.
For more detailed information please email or call our office and we will try to help.
Coronavirus help for limited companies
Help you can get now
HMRC have just set up a help line specifically for the self-employed who will be struggling now. The coronavirus helpline: 0300 456 3565. They will give you advice on your tax and any benefits you can claim for.
Cases of mortgage repayment holidays are being taken on a case-by-case basis, and the length of any suspension can vary between banks.
Other support for individuals facing financial difficulties owing to the virus includes:
- Refunds on credit card cash advance fees
- The option of applying for a temporarily increased credit card borrowing limit
- Asking for an increased cash withdrawal limit of up to £500
The measures are like those already in place for people facing financial difficulties.
UK Finance, which represents the major banks, said that all banks would consider increasing overdrafts or allowing repayment relief for loan or mortgage repayments for those affected by the virus.
“We would encourage customers who think they may be affected to contact their provider as soon as possible to discuss the support available to them.”
Offering to let personal customers put off paying the mortgage for three months is inherently un-commercial – the sort of thing that would seriously damage your credit record if you did it without agreement. Similarly offering to convert capital repayment loans into interest-only loans for up to a year will cost the banks money.
Because they are expensive, the measures raise practical questions – above all, how will the banks establish that customers are truly affected by the virus rather than other factors? A doctor’s letter? They haven’t answered that question yet.
Sick pay and Benefits
If you’re not eligible for Statutory Sick Pay, because you’re self-employed, you might be able to claim new style Employment and Support Allowance (ESA) if you’re ill, or elements of Universal Credit if you need help with costs like children or housing.
You will no longer have to go to the Jobcentre Plus to claim Universal Credit if you’re advised to self-isolate.
Don’t delay making a claim for benefits, even if you think you might have been affected by coronavirus.
However, if you are already getting any of these benefits being replaced by Universal Credit:
- Housing Benefit
- Tax Credits
- Income Support
- Employment and Support Allowance
and need to make a claim for Universal Credit because of coronavirus, check with the Citizens Advice Help to Claim service as soon as possible to find out how they might be affected and to get advice about your situation.
If you think you’ve got coronavirus
If you have any of the symptoms of coronavirus, such as a cough, high temperature or shortness of breath, it is important you follow the NHS guidelines to protect yourself and prevent the spread of the virus.
If you’ve got coronavirus
If you have coronavirus you are entitled to your workplace’s usual sick leave and pay entitlements.
You would usually have to supply a sick note or fit note from a doctor to do this. But you will now be able to get a sick note by calling the NHS 111 phone line.
If you’ve been told to self-isolate
If you have been to an affected area, been in close contact with someone who has coronavirus, or are waiting for coronavirus test results, you must self-isolate yourself for 14 days.
If you have a persistent cough, fever or flu-like symptoms you should self-isolate for seven days.
You will now be entitled to claim Statutory Sick Pay (SSP) if you’re self-isolating and will be able to get a sick note or fit note by calling NHS 111.
If you need to claim benefits like Universal Credit, you will no longer have to attend a jobcentre if you’ve been advised to self-isolate.
If you’re self-employed, a contractor, work on a freelance basis, in the gig economy or on a zero hours contract, your rights to sick pay and time off are much more limited. If you’re working in the gig economy, check with the company to find out what your rights are.
Unless it has been agreed as part of your contract, you will not be entitled to Statutory Sick Pay, sick leave or paid holiday leave.
If coronavirus means you’re unable to work for any reason and you’ve paid enough National Insurance Contributions, you might be able to claim new style Employment and Support Allowance (ESA) if you’re ill, or elements of Universal Credit if you need help with costs like children or housing.
If you can claim new style Employment and Support Allowance (ESA), you’ll get paid from the first day, rather than after eight days.
If you’re self-employed and need to claim Universal Credit, the rules around the minimum income floor will be relaxed for the duration of the outbreak of coronavirus.
Don’t delay making a claim for benefits if you think you might have been affected by coronavirus.
But you should remember the application process for benefits will be longer than the 14-days recommended for self-isolation.
Find out more about Universal Credit if you’re ill.
Learn more about claiming Universal Credit if you’re self-employed.
Step by step guide to furloughing employees
- Decide what staff you want to furlough
- Both employees and their employer must agree before an individual can be put ‘on furlough’ (we can provide a draft letter)
- You can choose to furlough some but not other employees
- You can make employees redundant while they are ‘on furlough’ or immediately after. If an employee is made redundant while on furlough, their redundancy rights are not affected.
- you can claim for the grant for a minimum three-week period and for up to three months, although the government may decide to extend this.
- Employees placed on furlough cannot undertake work – i.e. provide services or generate revenue for or on behalf of their employer.
How is sick page calculated?
For full time employees, it is based on the actual salary before tax as of 28 February 2020.
For employees whose pay varies, the employer can claim for the higher of either:
the same month’s earnings from the previous year
average monthly earnings for the year
If the employee is employed for less than a year, claim for an average of their monthly earnings since they started working. If the employee only started in February 2020, use a pro-rata for their earnings so far to claim
Fees, commission and bonuses should not be included.
You need to pay at least 80% of the salary but may top it up if required
You must not reduce the salary below that of February 2020.
The grant is taxable and should be included in your income when doing your accounts
The maximum salary is £2,500
If we do your payroll we will advise as to what you need to do to claim the grant automatically, once it is ope
If you do your own payroll then please ask us as to what the process is once the portal is opened – we will be only too pleased to help.
Martin Lewis on Twitter
A plea to all UK employers. If people can't work for any reason – furlough em. It's not cheating the system, it's upholding it…
All pls share
— Martin Lewis (@MartinSLewis) March 31, 2020
Company directors – eligibility for furlough
As office holders, salaried company directors are eligible to be furloughed and receive support through this scheme. Company directors owe duties to their company which are set out in the Companies Act 2006. Where a company (acting through its board of directors) considers that it is in compliance with the statutory duties of one or more of its individual salaried directors, the board can decide that such directors should be furloughed. Where one or more individual directors’ furlough is so decided by the board, this should be formally adopted as a decision of the company, noted in the company records and communicated in writing to the director(s) concerned.
Where furloughed directors need to carry out particular duties to fulfil the statutory obligations they owe to their company, they may do so provided they do no more than would reasonably be judged necessary for that purpose, i.e. they should not do work of a kind they would carry out in normal circumstances to generate commercial revenue or provides services to or on behalf of their company.
This also applies to salaried individuals who are directors of their own personal service company (PSC).
An example furlough letter for employers
[Send to employee’s address or email. Note you should discuss and record employee agreement to be furloughed before you send this letter.]
Dear [Employee Name],
NI NUMBER AND / OR PAYROLL NUMBER
The purpose of this letter is to formally notify you that your position as [INSERT] on the [XXX DEPARTMENT] is being closed temporarily due to the downturn in business as a result of the COVID-19 Pandemic.
Your last official day of work will be [INSERT DAY]. Your salary and benefits will continue at their current level during the Furlough period. Please understand this action in no way reflects dissatisfaction with your job performance.
The length of this furlough is [insert future date or unknown currently].
We will provide regular information as the current Pandemic unfolds and when we return to normal working routines.
A Furlough is a short-term paid temporary leave of absence at 80% [AS APPLICABLE] of current salary. The furlough period and provisions may be changed or terminated at the sole discretion of the Company and do not create any employment contract, express or implied.
During the furlough period, your pension and other benefits will continue [IF APPLICABLE].
Thank you for your contributions to the business and if I can help in any way, please contact me.
Statutory sick pay – an employer’s guide
The weekly rate for Statutory Sick Pay (SSP) is £94.25 for up to 28 weeks. It is paid:
- for the days an employee normally works – called ‘qualifying days’
- in the same way as wages, for example on the normal payday, deducting tax and National insurance
Some employment types like agency workers, directors and educational workers have different rules for entitlement.
Directors can decide what remuneration to pay and when. There’s no need for a resolution of the company’s shareholders at its Annual General Meeting (AGM). In such cases payment of director’s fees are regarded as earnings for the purpose of entitlement to SSP on the date payment was made.
You may still have to pay SSP even if you stop trading.
You cannot force your employees to take annual leave when they’re eligible for sick leave.
When to start paying SSP
Emergency legislation is being brought forward for employees who are self-isolating because of coronavirus (COVID-19). They will be able to get SSP from the first day they are off work. This will begin from 13 March.
SSP is paid when the employee is sick for at least 4 days in a row (including non-working days). You start paying SSP from the fourth ‘qualifying day’ (day an employee is normally required to work). The first 3 qualifying days are called ‘waiting days’.
You cannot count a day as a sick day if an employee has worked for a minute or more before they go home sick.
If an employee works a shift that ends the day after it started and becomes sick during the shift or after it has finished, the second day will count as a sick day.
You do not usually pay SSP for the first 3 qualifying days unless they’ve been off sick and getting SSP within the last 8 weeks.
When to stop paying SSP
SSP stops when the employee comes back to work or no longer qualifies.
You do not need to keep records of SSP paid.
You can choose how you keep records of your employees’ sickness absence. HMRC may need to see these records if there’s a dispute over payment of SSP.
Help with sick pay
Reclaiming Statutory Sick Pay
You cannot reclaim Statutory Sick Pay (SSP) for sick leave any more.
For businesses with fewer than 250 employees, the cost of providing 14 days of Statutory Sick Pay per employee will be refunded by the government in full. This will provide 2 million businesses with up to £2 billion to cover the costs of large-scale sick leave.
Companies House and COVID-19
If your company cannot file accounts on time
If COVID-19 has affected your company and you need more time to file your accounts, you should act before your filing deadline.
All companies must send their accounts, reports and confirmation statements to Companies House every year. If a company’s accounts are filed late, the law imposes an automatic penalty.
Your company should take appropriate measures to make sure accounts are filed on time. You should also file your accounts online if you’re able to.
If, immediately before the filing deadline, it becomes apparent that accounts will not be filed on time due to your company being affected by COVID-19, you may make an application to extend the period allowed for filing.
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.
Each appeal is treated on a case-by-case basis, and we already have policies in place to deal with appeals based upon unforeseen poor health. Appeals based upon COVID-19 will be considered under these policies.