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Tag: CJRS

CJRS

  • Coronavirus – Remember, remember the 5th November

    There will be new funding for:

    CJRS – Coronavirus Job Retention Scheme – August version applying to November [EDIT: EXTENDED TO END OF MARCH 2021]

    Employees agree to receive 80% of their reference pay, which the government pays up to £2,500 per month. Their employer pays employer national insurance and pension contributions, and may top up the basic pay beyond 80%. Training, voluntary work or work for another employer may be carried out during a furlough period.

    If there is some work to do, employees may be on flexible furlough, paid in full for the hours worked, with the government payment only applying for non-worked hours.

    Importantly, an RTI submission must have been made by close of 30th October, again emphasising government preference to use up to date information and to help prevent fraud.

    To date, the reference pay has usually been as it was on or before March 2020, with no pay rises expected. As new employees and employers may use this November scheme, the reference pay will need to change perhaps to the amount paid on or before October. We’ll be checking the details when they come out.

    For shareholder-directors on a tax year 2019/20 reference salary of £719 now finding there is no work for them beyond statutory duties, they should be able to claim at least £575.20 for November while paying themselves the 2020/21 recommended £732 monthly salary. Again, we need to see the details in due course.

    Business Grants – Premises based businesses

    Further business grants will be paid for businesses required to close with properties with a rateable value of: 

    • £15k or under, receiving £1,334 per month.
    • Between £15k-£51k, receiving £2,000 per month.
    • £51k or over, receiving £3,000 per month. 

    The reference to a monthly figure clearly suggests this lockdown may last longer than the hoped-for one month!

    Often used to pay rent and utilities, these are essential for businesses who can’t trade at all.

    If you can offer phone or online retails sales for your product or takeaway options for your food, this will help you survive. Together with 5% VAT still applying for takeaways, perhaps you can keep putting those fires out!

    There are also numerous grants for all sorts of businesses, nothing to do with Coronavirus, which may be worth a bit of research.

    SEISS – Already extended

    There was no mention of the self employed grant which was previously extended with a maximum payable for November-December-January of a total £3,750. [EDIT: INCREASED TO £7,500 OR 80% OF PROFITS IF LOWER] With many businesses not being eligible at all so far, such as those with historical profits over £50k, presumably those exclusions need to be revisited as time goes on, as well as the amount, in the light of this lockdown. 

    BBLs – Business Bounce Back Loan – to 30th November [EDIT: 31ST JANUARY]

    Remember, remember not only the 5th November, but the 30th. If you’ve not yet taken out a BBLs loan for up to £50k, you may need to revisit this to help see you through. If so, your application needs to be in by 30th. [EDIT: 31ST JANUARY]

    Businesses should revisit their particular business model, fixed and variable costs and how government, or other, assistance can help them put these fires out!

  • WEP WEP WEP? Winter Economic Plan? Or…

    To add to the self employed (SEISS) and employee (CJRS) grant schemes already introduced, the employee Job Support Scheme (JSS) will start from 1 November, to pick up from the end of the CJRS the previous day, and run for the following six months. In addition, your business will receive the previously announced £1k Job Retention Bonus in February for those staff.

    The SEISS will similarly be extended to cover a further six months to end of April 2021, also at lower amounts, for the self employed.

    There are extensions to VAT and income tax payment due dates and improvements to the BBLs and CBILs terms to help yuor business’ cashflow further.

    Job Support Scheme (JSS)

    As long as employees work at least a third of their ‘usual’ hours, the government and employer will each pay one third of their ‘usual’ pay for their unworked hours, with the government contribution capped at £697.92.

    Meaning that the government will pay up to 1/3 of 67%, being 22% of pay (up to the cap) and the employer pays 55%, being 22% plus the 33% for the hours worked.

    You may be keen to know where the specific £697.92 came from. It seems to derive from a maximum annual reference salary of about £38k, not far off the £37,500 used for the CJRS.

    There isn’t anything to suggest that directors will be treated differently, although we’ll have to wait for further details to know for sure, but clearly on the usual low director salary the JSS has limited value.

    Self Employed (SEISS)

    The current version SEISS 2.0, opened in August 2020, pays a 3 month lump sum of up to £6,570 being 70% of £3,125 of your average profits.

    Today SEISS 3.0 and 4.0 were announced covering November-December-January and February-March-April, respectively. The SEISS 3.0 grant will be for 3 months of 20% of average profits up to a maximum of £1,875.

    This is much lower than before, being just under 30% of SEISS 2.0. Interestingly, this is about 90% of the JSS. Perhaps this is some in-built clawback of previously lower national insurance payments? The SEISS 4.0 grant hasn’t yet been announced.

    SEISS 3.0 and 4.0 are NOT dependent on claiming SEISS 2.0 or SEISS 1.0 (but you do need to be currently eligible).

    Presumably if you were adversely affected, say in August, but business has since picked up, you can’t claim SEISS 3.0 or 4.0. But how to measure ‘reduced demand’ isn’t yet clear. Perhaps a turnover comparison will be required for SEISS 3.0 and 4.0?

    Reduced 5% VAT

    Proving to be valuable to the hospitality and tourism sector, this reduced VAT will now continue beyond mid January to the end of March 2021. Remember this applies to sales of food and non-alcoholic drinks from restaurants, pubs, bars, cafés and similar premises, supplies of accommodation and admission to attractions. Do check the details if making a claim to recover VAT for subsistence when travelling for business.

    You don’t need to pass this reduced VAT onto your customers, as it may be needed to help keep your staff in their jobs.

    VAT Deferral

    If you deferred your VAT and were expecting to pay it in full by next March 2021, you may now spread that payment over 11 instalments during the 2021/22 financial year to end of March 2022.

    If you want to do this, look out for details on the ‘New Payment Scheme’ which you’ll need to opt into in early 2021.

    Income Tax 31 July 2020 Deferral

    Expected to be due by 31 January 2021, these deferrals already made can enter a plan to pay over a further 12 months, with the final payment due by 31 January 2022. This is only available if your income tax is under £30k.

    If you want to do this, look out for details on the ‘Self-service Time to Pay’ facility.

    Bounce Back Loans – Pay As You Grow

    Borrowers will be offered a delay from 6 years to up to 10 years to repay their loan. You can move to interest-only payments for up to 6 months for up to 3 times and pause repayments entirely for up to 6 months but only once during the term.

    Similarly a loan under CBILs can be extended from 6 years to up to 10 years.

    If you’ve not yet applied for one of these loans, you now have two months until 30 November to do so. Not an easy thing to do for many SMEs, so perhaps these extensions will be persuasive and save some businesses from permanently closing.

    At least, there is no Budget this autumn leaving businesses the time and space to focus on surviving the virus and hopefully thriving in the long run. 

    Please ask your usual On The Spot contact for further assistance. 

  • Coronavirus Grants 2.0 – Finding Your Exit – Small Businesses

    Apart from using the same £2,500 monthly maximum, the two schemes are very different with the self employed now compensated for a maximum of 6 months and employees a maximum of 8 months. This perhaps reflects the fact that the self employed can work as much as possible, but employees cannot work at all or, more likely, the government would prefer employers to take more time to make decisions about redundancies.

    What do I need to know?

    Self Employed (SEISS)

    The current version SEISS 1.0 closes on 13 July 2020 with the new version SEISS 2.0 opening in August 2020.

    The maximum drops from £2,500 per month to £2,187.50 per month, rounded up to a 3 month lump sum of £6,570 being 70% of £3,125 or your average profits, as currently calculated, if lower.

    You can claim both grants or only one: SEISS 2.0 is NOT dependent on claiming SEISS 1.0.

    Presumably if you were adversely affected early on, say in April, where your profits dropped in April, but they have since picked up, you can’t claim SEISS 2.0, but this isn’t yet clear.

    Coronavirus Job Retention Scheme (CJRS)

    June – carries on as now, except any employee who needs to be in a claim from July, must be in a claim in June. With the 3 week minimum, this is an effective last date for newly furloughed employees of 10 June. All claims for June (and presumably earlier) must be made by 31 July.

    July – carries on as now, except employers can choose not to claim for any hours/days employees work paying them their full pay as before the crisis.  

    This could be beneficial for shareholder-directors who may be able to generate good profit for their limited companies in a couple of days but pay themselves only their usual small salary.

    August – as July, except employers must pay any employer’s national insurance (NI) and pension contributions on furloughed pay.

    September – as August, except the government grant to the employer is 70% of pay up to a maximum of 70% of £3,125 = £2,187.50 adjusted for any hours/days worked.

    October – as September, except 70% is now 60%, being a maximum 60% of £3,125 = £1,875 adjusted for any hours/days worked.

    What are the figures for shareholder-directors who can’t work?

    Taking the typical reference salary of £719, the £575.20 current furlough claim will change as follows:

    • June £575.20
    • July £575.20
    • August £575.20 (no NI or pension)
    • September £503.30
    • October £431.40

    Unfortunately, a dividend replacement scheme for shareholder-directors wasn’t announced, with the Chancellor reminding us to use other measures such as business bounceback loans, VAT deferral and income tax deferral. HMRC is also being helpful where companies ask to defer corporation tax under general time to pay provisions.

    Further details on both schemes will be available on 12 June. In the meantime, businesses are still working their way through this, looking for their way out.

    Please ask your usual On The Spot contact for further assistance.