The reforms to the off payroll working rules, IR35, are being postponed from April 2020 to April 2021 as a consequence of the Covid 19 outbreak.
The chief secretary to the Treasury confirmed that this was not a cancellation but merely a deferral. He confirmed that ” the government was committed to reintroducing this policy to ensure that people working like employees but through their own limited companies pay broadly the same tax as those employed directly “
In response to Covid 19, two forms of grant funding schemes will be delivered by local authorities to eligible businesses. For more information please visit www.businesssupport.gov.uk
Under the small business grant fund eligible businesses in England who receive either small business rates relief or rural rates relief will be eligible for a grant of £10,000. Eligible businesses will receive one grant per property used for business purposes. The ratepayer as per the authority’s records on 11th March will receive the grant.
Under the retail, hospitality, and leisure grant fund eligible businesses in England in receipt of the expanded retail discount with a property that has a rateable value up to £15,000 will receive a grant of £10,000. If the property has a rateable value of £15,000 up to £51,000 then the grant is £25,000. Again the property must be used for business purposes, as at 11th March.
The government has confirmed that they will not accept deliberate manipulation and fraud, and any business caught falsifying their records to gain a grant will face prosecution and a claw back of the grant.
In cases where there are clear errors on the rating list as at 11th March, local authorities may at their discretion withhold any grant or award any grant based on their view as to which business was entitled to it.
New advice and guidance has been issued by the government on this area, and can be accessed via www.gov.uk coronavirus guidance for landlords and tenants.
In summary :
1) Landlords are advised not to start possession notices during this period without very good reason.
2) Tenants have a right to a decent, warm, and safe place to live.
3) Tenants should continue to pay rent as best they can. If there are difficulties, then the tenant should speak with the landlord as soon as possible. Landlords should be understanding.
4) Mortgage lenders have agreed to offer up to 3 months payment holidays, including buy to let mortgages.
5) Landlords should continue to charge rents through this period, but payments may of course not be possible by some tenants.
6) Landlords and tenants are asked to take a pragmatic approach to reaching any agreement in these difficult times.
7) Landlord repair obligations continue, but planned inspections may be more difficult. This does not mean that they should not be done. Urgent repairs should be done within the guidelines to ensure that the ability to live safely is maintained.
8) Gas and electric safety inspections should be followed, and landlords should make every effort to abide by existing gas and electrical safety regulations.
The self employed income support scheme ( SEISS ) will support self employed individuals during the Covid 19 crisis, by providing a taxable grant to self employed individuals/partners worth 80% of their profits up to a cap of £2,500 per month. The size of the grant will be based on average profits from the 2017, 2018, and 2019 tax returns. The scheme will apply where the majority of income comes from self employment ( at least 50% of total income ), and profits are less than £50,000, and will be open for initially 3 months.
To be eligible you must be self employed, have lost profits due to Covid 19, have filed a 2019 tax return ( if you have not yet done so, you have a 4 week period to do so ), have traded in 2019/20, be currently trading and intend to continue trading in 2020/21.
Individuals should NOT contact HMRC just yet. It is expected that HMRC will use existing information, and invite applications once the scheme is operational. Grants are expected to be start to be paid by the beginning of June 2020.
Not all self employed people will therefore benefit. For example those with income above the £50,000 or those who commenced self employment after 5th April 2019, or those who ceased or will cease their self employment.
The potential sting in the tail was Rishi Sunak’s reference to the fact that going forward there will be some form of alignment of national insurance costs for the self employed, compared to their employed counterparts. Tax rates can be expected to increase once this crisis is over with I think.
We have been told that businesses will receive grants in the coming months of £10,000 if the business pays rates and receives small business rates relief, and £25,000 if the business is in certain sectors. These grants will be automatic and will be dealt with by local authorities.
This may be so, but the local authority will only be able to make payment into your bank account if they hold this information.
Dealing with our own local authority, Bury MBC, they require you to submit certain pieces of information to them via the claim form on their website. This includes the applicant, the business name, the address, the local rates account number, contact numbers, and the bank details. I would expect other councils also to be dealing with the grants in the same way. This process takes a matter of minutes.
Please therefore complete any appropriate claim forms for the grant on the website of your local council to obtain the grant as soon as possible.
Thank you to Jayne O’Donoughue for letting me know.
As previously mentioned, one of the measures to help businesses during the current crisis is to allow businesses to defer payment of their VAT liabilities that fall due between 20th March 2020 and 30th June 2020.
It is the payment date which is relevant, and not the quarter end date that falls in this period.
Of course, if payment is made by the business, then you can simply not pay it.
If, however, the payment method is by direct debit, then you must cancel your direct debit with your bank if you want to take advantage of the deferral scheme. HMRC will not cancel your direct debit for you.
You must remember to reinstate the direct debit for the next VAT payment, otherwise a late payment will trigger a surcharge penalty or surcharge notice period.
Also, if you do defer the VAT payment, then you should remain conscious of the fact that this is a deferral scheme and not a write off scheme. The VAT deferred will be payable in the early part of next year.
We are receiving a lot of questions surrounding this new concept of a furloughed employee. The following is our understanding, but should not be relied upon for advice at this stage. We STRONGLY RECOMMEND that you speak with your employment solicitor for advice.
1) Furlough is from 1st March 2020 and will last for at least 3 months.
2) It is available to employees on the payroll as at 29th February 2020, and the amount of grant will be calculated based on the 12 weeks running up to 29th February.
3) Furloughed employees MUST NOT work for the employer during the period of furlough.
4) All UK businesses are eligible, and the scheme pays a grant for qualifying payments through a new online system, which is being built at the moment for this purpose. There will therefore be a negative cash flow to the employer until such time as the grant can be accessed.
5) RTI reporting of payroll will be done as normal for the payments.
6) The maximum grant is 80% of wage costs ( gross + employers NIC + auto enrolment pension etc ) up to a maximum of £2,500 per month.
7) The rules of the scheme are being designed with underlying reference to employment law. Employment contracts are necessary, as are amendments to that contract to cover furlough. Hence the necessity to speak with your employment law solicitor.
8) The scheme is an option instead of redundancies. It is not to cover employers who make the decision to send home their employees, or to replace sick pay.
PLEASE DO NOT ASSUME THIS IS AN AUTOMATIC RIGHT THAT THE EMPLOYER WILL RECEIVE. WE CURRENTLY BELIEVE THAT HMRC WILL ULTIMATELY CARRY OUT CHECKS TO VERIFY THE VALIDITY OF BOTH THE AMOUNTS PAID AND ALSO THE RIGHT TO CLAIM THE GRANT.
The JRS is an incentive for employers to help employees to stay on the payroll. To access the scheme the employee needs to be classified as a furloughed worker. Whilst furloughed the employee should not undertake any work whatsoever for the employer, including answering calls or emails. The employer can claim a grant of up to 80% of the employee wage payment up to a cap of £2,500 per month.
The employee remains employed, and it is NOT compulsory for the employer to fund any difference between the furloughed payment and normal 100% salary.
The employer should discuss the JRS with the employee as part of the normal consultation process. It is likely that JRS will not interrupt an employees continuity of service and holiday entitlement will continue to accrue.
The grant is a reimbursement by HMRC of costs paid to the furloughed employee, so the employer will face negative cash flow costs on any payments made. The scheme will run for at least 3 months from 1st March 2020, and the scheme will be open hopefully before the end of April for employers to submit their claims.
We anticipate, if our scheme follows that used in the USA, that furloughed employees will be deemed as taking a leave of absence from work, and the grant will not be ” pay ” for PAYE/NIC purposes.
All UK businesses are eligible to access the JRS as long as they a) designate affected employees as furloughed workers b) notify the employee of this change in accordance with employment legislation, and c) submit information to HMRC about the employee ( NB this has not yet been set up by HMRC ).
Businesses should prepare by
1) set up payroll with a furloughed pay element
2) calculate the furloughed pay based on the 12 weeks salary to 28th February 2020, using regular pay ( exclude overtime & bonuses ).
3) for sick employees base the furloughed pay on amounts excluding sick pay.
4) Assume PAYE/NIC deductions will be due, albeit these HMRC payments will likely be deferred.
5) this is a grant, so cash flow to the employer will be negative, and so a loan may be needed.
NB……….If an employer shuts and tells staff who are able and willing to work not to come into work, then the employer would be liable to pay full pay as it is they who have made the decision, unless there is a shortage of work/lay off clause in their contract of employment/handbook.
Following on from the delivery speech by Boris Johnson last night, we are all being instructed to stay at home unless : we are shopping for basic necessities; we are taking one form of exercise alone/with family; any medical needs; travel to and from work where this is essential.
Because of this, our office will be reduced to an absolute skeleton staff for the next 3 weeks, which will be providing essential services to clients. There may therefore be a loss of efficiency to our clients, and we can only apologise. I trust that you will understand and bear with us.
All non essential public spaces and shops are closed from last night.
The following businesses and premises MUST remain closed:
1) Restaurants, cafes, and work place canteens ( unless for take away ).
2) Public houses, bars, members clubs and nightclubs.
3) Hair, beauty and nail salons, piercing and tattoo parlours, massage parlours, all retail outlets ( excluding supermarkets, food shops, pharmacies, petrol stations, bicycle shops, home/hardware shops, launderettes, garages, pet shops, corner shops, newsagents, post offices and banks ).
4) Outdoor & indoor markets ( unless food markets ), auction houses, car showrooms.
5) Hotels, B&B, campsites, boarding houses, caravan parks.
6) community centres, youth centres, places of worship, cinemas, theatres, concerts.
7) Museums, galleries, bingo halls, casinos, betting shops, spas, skating rinks, fitness studios, gyms, leisure centres, swimming pools, arcades, bowling alleys, soft play areas, enclosed places in parks, sports courts, pitches, outdoor gyms and similar.
All clients operating in these sectors MUST obey the laws.
Updated guidance has been provided today at www.gov.uk/government/guidance-to-employers-and-businesses-about-covid-19
The updated guidance provides information on
1) What employers need to do in the workplace, with regards work from home, if someone becomes unwell, and general hygiene in the workplace.
2) What the employer should do if anyone develops symptoms.
3) Sick pay and the certification needed, as well as if an employee needs time off to look after someone else.
4) Staying at home, sick pay, SSP start date, proof of sickness, if you are self employed, furloughed workers, claiming benefits, if you have covid 19, if you are self employed, and support for rent costs.