There have been some recent developments in terms of the support available to businesses during the ongoing coronavirus pandemic, particularly in respect of the Coronavirus Job Retention Scheme, commonly known as the “furlough” scheme. There has also been an extension to the SEISS, which provides grants for the self employed.
And Facebook might even be giving away free money!
The scheme is being extended to 31st October 2020, but with some very major modifications from July 1st.
Part Time Furlough: from 1st July, it will be possible to bring back staff from furlough and pay them on a part-time basis. For the hours/days that these employees work, they should be paid their agreed rate of pay. This will allow for a more gradual return to work as trade picks up after the shock of the last few months.
However, part-time working can only be applied to employees who have been furloughed before 10th June 2020. It is not possible to put some workers on part time furlough if they have never been on furlough before that date
Employers Contribution to Furlough Costs
The Chancellor has made it clear that he expects employers to start contributing to the cost of the furlough scheme. Employees must continue to be paid at least 80% of their salaries whilst on furlough.
- June & July – HMRC will pay 80% of wages up to £2,500, Employers National Insurance and minimum pension contributions, just the same as for March, April & May.
- August – HMRC will pay 80% of wages up to £2,500. The cost of Employers NI and Pensions will not be refunded
- September – HMRC will pay 70% of wages up to £2,187.50. The cost of Employers NI and Pensions will not be refunded
- October – HMRC will pay 60% of wages up to £2,187.50. The cost of Employers NI and Pensions will not be refunded
The scheme will end at the end of October. We will continue to support our clients with their furlough claims.
Please bear in mind that employees must agree to being put on furlough, and is important to communicate the changes as and when they happen.
By the end of October, bearing the cost of additional salary, NI and pension contributions on furlough pay could prove to be a substantial burden for some businesses. It would be advisable to undertake a hard assessment now of the potential impact on cash flow before these changes start to bite.
Representations are being made to HMRC in respect of certain types of businesses, particularly those in the hospitality industry, to extend the scheme where those businesses have to remain closed due to the social distancing rules.
Self-Employed Income Support Grant (SEISS)
The Chancellor announced that this scheme will be extended for an extra 3 months covering June, July & August. Applications for the first grant will remain open until 13th July. The second grant will open in August and is a taxable grant worth up to 70% of your average trading profits capped at £6,750. Most of our clients who applied for the first grant found this to be relatively straightforward.
Facebook are also offering the chance to apply for a cash grant or advert credit to help you get your business back on its feet – for more information visit their site here: https://www.facebook.com/business/boost/grants?ref=alias Refer to the section at the end “How do I apply” and then “See Eligible Areas and Apply”. The UK scheme is not yet open but there is no harm in registering your interest in getting some financial support from one of the richest companies in the world.
And a reminder about two other pieces of support:
Bounce Back Loan
If you have not given due consideration to applying for a Bounce Back Loan, then please set some time aside to do this now. Depending on the business turnover, it is possible to borrow up to £50,000. These loans are generally very easy to apply for, there are no fees and no interest is payable in the first year. Given the huge uncertainties that we all face, having a reserve like this could have be a lifesaver. Given the huge popularity of the loans, it is possible that the scheme could be closed shortly so do not delay in reviewing this opportunity.
Deferral of Personal Self Assessment Payment in July
If you are due to make a large payment in July, you can opt out of paying, although that amount will be payable in January 2021 together with other tax liabilities. You do not need to apply for approval: just hold back on paying in July and treat this as an interest free loan for six months. But please bear in mind that failure to pay personal tax could potentially result in bankruptcy.
The fraudsters are out in force to trick business owners out of the little money they do have. Emails headed “HMRC -You are eligible for a grant” etc are all scams. Be warned. If unsure, always check with us first.
We strongly advise you to seek appropriate advice before taking action on any of the points listed above.
All information contained in this document are correct at the time of writing. Legislation and regulations may change at any time.
If you are in any doubt, please call us for clarification.
About us: Leggate Associates Limited was formed by Andrew Leggate LL.B FCMA FCA CGMA who has over 40 years of tax and accountancy experience in industry and practice, and the practice is managed by Joanne Leggate FMAAT, ATT (Fellow). Our clients range from building subcontractors to multi-million pound concerns and high net worth individuals all over the UK. Please see our website www.leggateassociates.co.uk or follow @LeggateAssoc on Twitter for occasional updates.
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