Over the past year, the support that the Government is offering businesses to protect jobs and income has developed as they have learned what’s effective and justifiable. Here Susie Kevern of Pound Lane Financial Management and Charlotte Pengelly of Fitzgerald HR look at what support is currently available to businesses
While we can’t look past the spring without a crystal ball, it’s important to know what business support looks like at the moment. The next budget is due to be announced on 3 March, so look out for changes and updates then, but it is likely that support will continue to focus on the self-employed and job support schemes.
The Coronavirus Job Retention Scheme
The Government has confirmed that the Coronavirus Job Retention Scheme (CJRS) will be available until 30 April 2021. The CJRS has evolved many times since its creation last year, and HM Treasury issued the Coronavirus Direction No. 6 on 25 January, which confirmed how the scheme will operate between 1 February and 30 April. You can find extensive guidance on using the scheme on the gov.uk web site.
Under the current scheme, employers can place an employee on furlough leave and claim a grant from the CJRS for 80% of the employee’s wages up to a cap of £2,500 per month. Employers are only required to contribute the associated National Insurance and employer pension contributions towards furlough pay. However, they can top up pay to 100% if they wish to do so. Employees can be flexibly furloughed with employers covering wages due for any hours worked.
An important point to note is that since 1 December 2020, you are no longer able to claim the grant for employees serving contractual or statutory notice periods. In addition to this, in most cases, HMRC is now publishing data on employers who are claiming against the scheme.
With changes in risk level and national restrictions, it is helpful for employers to have clarity around which employees are eligible to be furloughed. There are several eligibility requirements that need to be met to use the scheme, which are detailed at gov.uk.
The Government has confirmed that clinically extremely vulnerable individuals who are shielding can be furloughed where they are unable to work from home and are otherwise eligible to receive the grant from the CJRS.
Individuals with caring responsibilities as a result of COVID-19 can also be placed on furlough, where eligible. This is relevant for parents and carers of children at home due to childcare facility and school closures as well as for individuals providing care for a vulnerable person.
In addition, the Government has now provided guidance on how to use the lookback method to calculate reference salary for claims relating to March and April, so that employers refer to pay in March and April 2019 as opposed to March and April 2020. Find out more about the scheme in Fitzgerald HR’s guide to the Coronavirus Job Retention Scheme.
Sick Pay Refunds
Businesses with fewer than 250 staff can still claim refunds for up to two weeks of statutory sick pay relating to Coronavirus. This needs to be claimed separately from payroll, via a HMRC portal.
Self Employed Income Support Scheme (SEISS)
If this is an option for you, then you are most likely already using the scheme. At present, the Chancellor has confirmed that Phase 4 will provide a payment that covers lost profitability up to the end of April 2021.
HMRC Time To Pay for business taxes
The past year has had a huge impact on cashflow and profit for many businesses, with a lot struggling to pay their taxes. HMRC has set up a dedicated team which can set up payment plans, suspend debt collection efforts and cancel late payment fees on tax debts.
2019/20 Self Assessment
Income tax for 2019/20 was due to be paid by 31 January this year. If you have difficulty paying, you can arrange to spread payment over as many as 12 monthly instalments.
Business Interruption Loans
Both the Bounce Back and CBILS loans are still available, currently for applications received before 31 March (this has been extended several times). There are now more lenders offering CBILS loans and interest rates will be fixed. Bounce Back Loans now have options for payment holidays or term extensions to help smooth cashflow issues for up to 10 years.
Local Authority Grants
There are still grants available for retail and hospitality businesses that are struggling or have been forced to close during lockdown, based on the rateable value of premises. Check out the North Devon Council and Torridge District Council web sites for details.
5% VAT rate for hospitality
Currently the VAT reduction for hospitality and tourism businesses will end on 31 March, although since many of the businesses this was designed to help have been closed since the beginning of the year, it may be extended.
No further help for directors
There is still no income support available for directors who solely take payment from their business via dividends. Directors who take a minimal salary have the option to use the furlough scheme, but this requires that they do not work in the business beyond carrying out their statutory duties.
■ Pound Lane Financial Management on 07801 199671 or poundlane.co.uk
■ Fitzgerald HR on 0330 223 5253 or fitzgeraldhr.co.uk