Second Lump Sum Grant For Self Employed

HMRC have confirmed that the Self Employment Income Support Scheme ( SEISS ) will be extended. The eligibility criteria will remain the same but the grant will be 70% rather than 80% of average earnings for 3 months and the cap will be £6,570 down from the first grant cap of £7,500.

This is good news for the self employed, as more than 2.3 million individuals claimed a SEISS grant first time around.

The first claim period covered March to May, and the SEISS portal for this claim will close on 13th July. An individual does not need to have claimed the first grant to be eligible for the second grant.

Applications for the second grant will open in August, and HMRC expect to publish further guidance on 12th June.

Flexible Furloughing

From 1st July ( earlier than previously announced to start in August ) an employer can flexibly bring a previously furloughed employee back to work part time. The government will continue to pay 80% of the wages for the normal hours they don’t work up to the end of August, and subject to satisfying all the criteria. There will be no minimum time that staff can be furloughed for, compared to the current 3 week period.

Any working hours must cover at least 1 week and the agreement with the employee must be in writing. When claiming the grant, this must be for a minimum of a week, but longer periods can be claimed for if this is the preference of the employer. The data submitted to HMRC will include the employees usual hours, and actual hours worked.

From August the government grant for furlough will be slowly tapered off.

In June & July the government will pay 80% of wages ( up to a cap of £2,500 per month), + employers NIC + pension contributions.

In August the government will pay 80% of wages ( up to £2,500 again ) but NO NIC & NO pension costs.

In September the government will pay 70% of wages ( up to £2,187.50 per month ) but NO NIC & NO pension costs. The employer must pay 10% to top the wages up to the 80% amount, again capped at £2,500.

In October the government will pay 60% up to £1,875 with employers paying 20% to take the cap to £2,500, + the NIC + the pension.

It is important to note that the scheme will close to new entrants from 30th June. After that date the grants will only be available in respect of employees who had previously been furloughed for the minimum 3 week period. This means that the final date that an employee can be furloughed for the first time, and qualify for any furlough grants from 1st July onwards, is the 10th June date. This will then allow the current 3 week furlough period to be completed by 30th June.

Personal Liability on Bounce Back Loans

The bounce back loan scheme seems to have been the saviour of a lot of small businesses, with more than £14 billion borrowed under the scheme since its launch on 4th May. These loans are interest free for the first 12 months, and do not carry a personal guarantee for the directors. This all seems positive up to now.

However, there is a false assumption that if the company subsequently enters into a formal insolvency process, then there can be no liability on the directors.

This will NOT be the case if the directors have acted improperly and breached their fiduciary duties or abused the scheme.

Directors need to remain conscious of potential misconduct charges and preferential payments under the Insolvency Act and Companies Act.

A typical scenario may be where the bounce back loan is used to repay other company debts which may have personal guarantees attached. If this happens, and the company then goes into liquidation, then the insolvency practitioner would challenge this act, and pursue the directors personally as a preferential payment.

Covid 19 – Sick Pay Scheme

The Coronavirus Statutory Sick Pay Rebate Scheme ( CSSPRS ) enables small and medium sized employers to recover statutory sick pay which they have paid to their employees when the absence was related to Coronavirus. Employers can claim for a maximum of 2 weeks under the scheme, with no waiting days. For claims between 13th March and 5th April 2020 the rate of SSP was £94.25 per week, and since 6th April 2020 it is £95.85 per week.

The claim must be made through the CSSPRS online portal which opens on 26th May. Claims can be made by the employer, or the tax agent.

To make a claim, employers will need to be registered on the government gateway, and will need : the employer PAYE scheme reference; contact name and telephone number; UK bank or building society details for BACS receipts; the total amount of Coronavirus SSP paid for the claim period; the number of employees being claimed for; and the start date and end date of the claim period.

HMRC have confirmed that claims can be made for multiple pay periods and employees at the same time with the start date of the claim being the start date of the earliest pay period being claimed for, and the end date of the claim being the end date of the most recent pay period.

Furlough Update

This week the Chancellor has confirmed that the furlough scheme will now be extended until October of this year. It was due to end by 30th June.

There will, however, be changes to the scheme, and it is telling that the Chancellor made reference to employers making a contribution to the furlough payments. Other than making a reference to the employers contributing, there is currently no more detail. The changes will also include the ability for furloughed employees to work on a part time basis.

The changes to the scheme will come into force in August, and the full details of the changes to the scheme are expected from the government by the end of this month.

Health & Safety/Return to Work

This week we have received the updated guidance/message from government that businesses that are not specifically barred should start to encourage their employees back to work, and re open subject to safe working conditions.

All employers/businesses should now be carrying out a full risk assessment and updating their health and safety policies in respect of Covid 19. These policies should ideally be agreed by consultation with the employees/employee representatives.

Guidance on the risk assessment can be found on Gov.UK

Bounce Back Loan Scheme Update

A letter sent from the Chancellor to lenders on Friday 1st May, gives us more information on how the scheme will work. Some of the detail from the letter is set out below. The BBLS does of course go live on Monday 4th May for claims. If you want to access the scheme, then please contact your lender/bank as soon as possible.

If you need specific assistance, then we can introduce you to our contacts at Reach Commercial Finance, who we are confident will be able to help our clients access the funding they require.

1) The BBLS is a 100% government guaranteed loan scheme.

2) The interest rate will be set at 2.5%

3) The term will be 6 years.

4) Banks which are subject to the UK Leverage Ratio will be able to exclude BBLS loans from the leverage ratio exposure measure.

5) Businesses will be able to borrow up to £50,000 under BBLS, capped at 25% of turnover.

6) A customer with a CBILS ( Coronavirus Business Interruption Loan Scheme ) of £50,000 or less will be able to switch that facility to a BBLS loan should they choose to do so.