Here is an update on Henry and Banwell’s plans in what is a rapidly changing situation.
We have also added notes on the measures taken which are to help small businesses.
The advice has been updated to reflect the Chancellor’s announcements on 20 March 2020 regarding Job Retention Scheme and 26 March 2020 relating to Self-employed taxpayers and we will add further updates daily.
Latest news regarding the launch of the Furlough Scheme is that online applications can be made from 20 April 2020 (more detail below).
We are now working remotely so all services can be provided as normal over the coming months. Broadband will be under pressure so our ability to reply may be delayed, please bear with us.
We can also offer Skype and Zoom calls if required.
Government continues to make announcements regarding the impact of the COVID-19 virus and we address the economic measures below. Please note there is always a delay to the ‘how ‘ part of any announcement and we will update as we learn more.
Summary of important points for business ( with detail below):
Below is the latest announcement made on 26 March 2020 from the Chancellor.
Other important points for business
To update you on the latest Government measures and practical steps that businesses can take now to protect themselves economically as much as possible.
GOVERNMENT SUPPORT (as at 27 March 2020)
Whilst many of the measures mentioned below are new, some already exist or have simply been extended.
Coronavirus Job Retention Scheme
What does the government mean by furloughing
Who can be furloughed?
How does it work?
HMRC will reimburse 80% of the wages costs of furloughed employees, subject to a cap of £2,500 per month per employee.
What to pay?
As an employer you may need to renegotiate the employee’s contract: the need to do this may well reflect your financial circumstances.
The employees you furlough must not work for you during the furlough period. They remain your employees. It is not clear whether they are allowed to take temporary work elsewhere during the furlough period, but it may be that their employment contract currently forbids it. See 4. below for how you might wish to deal with this.
An announcement on 30 March 2020 by the Government confirmed:
Do not forget about employment law. This is for your protection as an employer (against claims by employees once this is all over) as well as the protection of your employees.
*We are unable to give employment law advice but have included some suggestions below which should help manage your risk here. If in doubt you must seek independent legal advice.
Steps to take when furloughing workers
Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.
How to access the scheme
You will need to:
HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement as existing systems are not set up to facilitate payments to employers.
HMRC has advised that businesses and their advisers can apply for grants when the Coronavirus Job Retention Scheme (CJRS) is launched on 20 April 2020.
The launch date announcement was provided by HMRC Chief Executive, Jim Harra on 8 April 2020 when he gave evidence to the Treasury Select
Committee. Mr Harra told the committee that HMRC aims to start payments of the grant to employers on 30 April 2020.
Applications will need to be made online. It will not be possible to make claims by telephone. We do not yet know whether separate provision will be made for those agents and businesses who are digitally excluded.
Business loans – application details to be announced on 23 March 2020
( Loans are referenced ‘ CIBLS’ – Corona Virus Business Interruption Loan Scheme)
Small and medium sized businesses (turnover under £12.9 million and 250 employees or less) can now apply for loans of up to £5 milllion under the coronavirus business interruption loan scheme. This is similar to the Enterprise Finance Guarantee (EFG) scheme and, like EFG, is delivered by the British Business Bank. Further details will be made available on their website as they are published;
High Street banks
The banks will offer different levels of support such as interest fee overdrafts
and loans . Watch out though for Personal Guarantees ( PGs) which some banks are demanding (even though there is a Loan Guarantee scheme up to 80%) as this means you could lose your home if it is enforced. Consider trying another bank if they ask for a PG.
Businesses that are entitled to Small Business Rates Relief or Rural Rates Relief are now entitled to receive a grant of £10,000, administered by the local authority to whom they apply for the relief, without the need to make an application for the grant. Please note local authorities will have already your contact details.
A firm can benefit from business rate relief if its property’s rateable value is less than £15,000. This would typically not apply to individuals working out of big offices, nor those working from a home office, but rather those working from a property separate to their house with a low rateable value.
The Chancellor also announced a £25,000 grant for retail, hospitality leisure businesses operating from premises with a rateable value for tax purposes of between £15,000 and £51,000. Whilst no detail has been given on how this is to be administered we would advise contacting the local authority to whom rates are paid to ensure that this grant is received by those entitled to it.
Statutory sick pay
The Chancellor announced last week that statutory sick pay will be extended to cover from day one of someone being off sick due to coronavirus for a period of two weeks without the need for GP sick note. This will be recovered by businesses through their PAYE and National Insurance monthly returns.
Business rates holiday
Where the rateable value of a Business premises is between £15,000 to £51,000 there will be a one-year business rates holiday 2020/21 for the retail, hospitality and leisure sector. This is automatically in place and being administered by the local authority to who you pay your rates to.
Employment allowance (EA)
EA is available for employers with a total qualifying employer’s (secondary) Class 1 National Insurance Contributions (NICs) of less than £100,000 per year. The EA was £3,000 for 2019/20 but has been increased to £4,000 for 2020/21.
EA is administered as de minimis state aid so anyone in a sector that already receives state aid needs to check the amount of aid they are receiving and their de minimus threshold/ ceiling to ensure that they qualify.
Time to pay (TTP) arrangements
HMRC has reintroduced TTP, having very quietly phased it out for many businesses over the last 3 years. Businesses and the self-employed who are struggling financially and have tax liabilities to meet can call the HMRC dedicated helpline to discuss a TTP arrangement on 08000 159 559.
STATUTORY SELF-EMPLOYMENT PAY SCHEME – COVID-1 (announced 26 March 2020)
What is available:
A taxable grant will be paid to the self-employed or partnerships, worth 80% of their profits up to a cap of £2,500 per month.
Initially, this will be available for three months in one lump-sum payment, and will start to be paid from the beginning of June 2020.
It will be called the Coronavirus Self-employment Income Support Scheme, and is open to those who were trading in the last financial year, still trading now, and planning to continue doing so this year.
Who is eligible?
More than 50% of a claimant’s income needs to come from self-employment.
The scheme will be open to those with a trading profit of less than £50,000 in 2018-19, or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19.
Those who are recently self-employed and do not have a full year of accounts will not receive any help under this scheme and will have to rely on benefits.
The government’s new help comes on top of a six-month delay for tax payments through the self-assessment system.
HMRC will contact you directly and ask you to complete and submit a Form.
Once processed they will pay the funds directly to your bank account.
Tax return 2018/19 not submitted?
If you have not submitted a 2018/19 tax return but have tax returns for the previous 2 years you have 4 weeks ( so 23 April 2020) to file your 2018/19 tax return so that you qualify for support
Tax payment due 31 July 2020 postponed
The July 2020 Payment on account is now payable on 31 January 2021.
Please get in touch if you need assistance to file your 2018/19 Tax return.
What can businesses do to help themselves during this difficult time? We have a number of suggestions to minimise costs and try to keep cashflow at manageable levels
Services and supply contracts
If a business is closed during the coronavirus outbreak then management need to look closely at all of the service and supply arrangements and only pay for those which the business is bound into and which are necessary.
Arrangements with landlords
Rent is often the biggest expense for any business so, if you have concerns about being able to meet your rental obligations speak to your landlord before you fall into arrears. Most leases require any variations to be agreed in writing and signed by all parties so please ensure that any arrangements you agree with your landlord are properly formalised in accordance with the terms of your lease to ensure you are fully protected.
Any necessary supplies and services where the business is not bound into a contract should be reviewed and renegotiated to minimise the ongoing cost. Remember, your suppliers are in the same position as you and will wish to preserve their own cash inflows as much as possible.
Zero hours contracts
Employers generally have no responsibility to offer work to casual staff and those on zero hours contracts. Unless such staff are essential to a continuing business activity this is an expense that is easily avoided
Contracted hours staff
These are full and part-time employees who, generally, will have to be paid whether they work or not, unless you can require or persuade them to take unpaid leave and/or holiday.
If contracted hours staff are self-isolating due to coronavirus then the only obligation will be to pay them two weeks statutory sick pay, unless their contract provides otherwise. As mentioned above this can be recovered for up to 2 weeks without a GP sick note from NIC returns. To continue receiving sick pay after this period the employee will need a sick note from their GP.
It is always an option to seek to lay off staff or place them on short time to reduce the cashflow burden. Specialist employment advice should be taken before such measures are implemented as employees can acquire a statutory right to redundancy if they are laid off or placed on short time. Redundancy obligations could increase the burden on cash flow instead reducing it.
CONCLUSIONS – Keep calm
If you need help or advice please feel free to contact us , we are here to help and please remember the whole country is affected so everyone is in a similar position to you.
Finally, we believe this will be a tough period and we will get back to a ‘new’ normal. In the meantime we need to preserve what we have for when that happens rather than abandon it.