The CJRS has been extended to the end of April 2021.
The CJRS extension scheme allows employers to reclaim 80% of the gross wages of hours not worked, but the employer will be liable for National Insurance and Pension contributions relating to the employee.
The scheme is going to allow both full time furlough and flexible furlough to be used, and businesses do not need to be closed in order to use the scheme.
The eligibility to the scheme has not changed, however employees now must have been on a payroll submission to HMRC between 00:01am on 20 March and 23:59pm on 30 October, meaning the scheme is now open to employees that may not have previously qualified.
Neither the employer nor the employee need have previously taken advantage of the CJRS scheme to qualify.
The calculation for furlough pay and the ‘usual’ hours has changed for those employees who have not previously been furloughed, meaning we now have two methods of calculation to use.
Employees previously furloughed
Use the original furlough reference pay and usual hours calculation:
Salaried employees – the last pay run prior to 19 March 2020.
Variable paid employees – the 2019/20 average pay or the pay in the same month of 2019/20.
Newly furloughed employees
Use the new furlough reference pay and usual hours calculation:
Salaried employees – the last pay run prior to 30 October 2020.
Variable paid employees – the average pay between 6 April 2020 (or the employee start date if later) and the last pay run prior to 30 October 2020.
Claims under the extended scheme can be made from 11 November, and claims must be for a minimum of seven consecutive days and all claims for the month of November must be made by 14 December.
It has now been confirmed that the CJRS grant available will remain at 80% until the end of the scheme.
It is looking unlikely the scheme will be further extended as the Government have announced the latest extension to April, is to allow for businesses to plan for the future giving them the 45 day redundancy notice period between the Budget on 3 March and the end of the scheme.
Job Retention Bonus
The £1,000 Job Retention Bonus that was due to be paid in February for those workers retained by employers during the months of November, December and January has been postponed. The incentive will be ‘redeployed’ at a future appropriate time. We will provide more guidance as it is released.
Local Restrictions Support Grant (England)
Any businesses which have business premises that are legally required to close in England due to the new restrictions will be eligible for a grant. These grants are calculated based on the Rateable Value of the business as follows:
Rateable Value Grant received £15,000 or under £667 per fortnight / £1,334 per month £15,001 to £51,000 £1,000 per fortnight / £2,000 per month £51,001 or above £1,500 per fortnight / £3,000 per month
To be eligible for the grant you must meet the following criteria:
• Open as usual before the restrictions (or your business has had to remain closed on a national basis since 23 March, for example, nightclubs)
• Providing services in person to customers from the premises
• Required to close due to restrictions imposed by government
• Paying business rates for the premises before restrictions commenced
If your business has already received the Small Business Grant earlier in the year, many Local Authorities will be able to process your grant more quickly.
Applications must be made via your Local Authority using the links below:
Carlisle (Open) – https://www.carlisle.gov.uk/news-and-events/update-on-services-6
Copeland (Open) – https://www.copeland.gov.uk/business-support-grant
Eden District Council will contact eligible parties directly – https://www.eden.gov.uk/your-council/news/media-releases/eden-district-councils-business-support-grants-17-november-update/
Additional Restrictions Grant (England)
This grant will be available to support businesses that have been severely impacted however they have not legally been forced to closed, or those businesses forced to closed but who do not pay business rates.
The full guidance has not been released regarding this grant and we will update this page as soon as further information is made available.
Strategic Framework Business Fund (Scotland)
This is for Scottish businesses that are required to close by law or significantly change its operations as a result of Coronavirus restrictions from 2 November 2020. Grants will be paid every 4 weeks in arrears. The first payment of this grant funding is due on or around 30 November 2020.
Applications to the Strategic Framework Business Fund should be made through your local authority website.
Find out more here.
Scottish Grants Announcement
The Scottish Government has announced two further grants.
Newly Self-Employed Hardship Fund (Phase 2)
This is the second phase of the Newly Self-Employed Hardship fund and is designed to assist those that missed out on the Self Employed Income Support Scheme due to not completing a 2018-19 tax return. To find out if you are eligible and how to apply please visit https://findbusinesssupport.gov.scot/coronavirus-advice/newly-self-employed-hardship-fund. This fund is expected to open week beginning 15 February 2021.
Mobile Close Contact Fund
This fund has been opened to assist those businesses that offer mobile, close contact services and therefore are unable to trade due to restrictions, for example Registered Driving Instructors. To find out if you are eligible and how to apply please visit https://findbusinesssupport.gov.scot/coronavirus-advice/mobile-and-home-based-close-contact-service-fund. This fund is expected to open week beginning 15 February 2021.
Self Employed Income Support Scheme (SEISS)
On Monday 2 November, the Prime Minister announced that the third round of the SEISS grants have been increased from the revised 40% announced in the Winter Economy plan revision.
The grant is calculated on 80% of trading profits for November, December and January.
The most recent update to the scheme brings the maximum grant to £7,500.
This grant scheme is only available to those who were continuing to actively trade but faced reduced demand due to the Coronavirus pandemic and those who were eligible for the original SEISS, with the first round in in May 2020, and the second round in August 2020.
The third-round grant will cover the three month period from November 2020 until January 2021, while the fourth round will cover the period February 2021 to April 2021.
You are able to claim for the third round from 30 November and claims must be made by 29 January 2021. Please follow the link to start your claim: Claim a grant through the Self-Employment Income Support Scheme – GOV.UK
The level of the fourth grant has not been announced at this stage.
To qualify for the SEISS payment, the following must apply:
- You must have submitted your 2018/19 Self-Assessment tax return on or before 23 April 2020,
- Self-employed profits must have been less than £50,000.
- Self-employed profits must be more than 50% of your total income for the year.
Additional qualification criteria has been released for the third grant as follows:
- You must declare if you are trading but impacted by reduced demand due to Coronavirus, or that you are unable to currently trade due to Coronavirus.
- You must also declare you intend to continue to trade, and that you ‘reasonably believe’ there will be a significant reduction in trading profits.
HM Revenue and Customs has released a list of examples to help you decide if you will qualify on the trading profit reduction:
“For example, a cafe owner who has fewer customers due to government restrictions on households mixing, which reduces her takings and reasonably believes this will significantly reduce her trading profits is eligible to claim.
In contrast, a café owner who increases her prices and believes her trading profits will not reduce significantly, is not eligible to claim the third grant.
A builder with coronavirus symptoms who self isolates for five days before receiving a negative test, is unable to work from home but is able to rearrange his contracts. He does not believe there will be a significant reduction in his trading profits, and is not eligible to claim the third grant.
An electrician is still trading but has had increased costs due to buying masks, cleaning supplies and screens is also not eligible because increased costs were the only impact on the business and it has not lost customers.
In another example, a dentist returns from a holiday abroad and has to self-isolate for 14 days due to quarantine rules. As this is the only impact on her business, she is not eligible to claim the third grant, because reduced demand due to self-isolation after foreign travel is not included in the eligibility criteria.”
Should you require any further guidance please do not hesitate to contact us.
Bounce Back Loans (BBL) and Coronavirus Business Interruption Loan Scheme (CBILS)
The deadline for applications for BBLs and CBILS, and also the Future Fund and Coronavirus Large Business Interruption Loan Scheme have been extended to the end of March 2021. The BBL rules have also been adjusted to allow businesses who have already borrowed less than the maximum (£50,000 or 25% of turnover) to ‘top-up’ their existing loans. This will be allowed from 10 November and businesses can only top-up loans once.
Mortgage and Consumer Credit Holidays
Mortgage holidays were due to end on Saturday 31 October. The government has now announced that any borrowers who have not already taken a payment holiday will entitled to a six-month payment holiday. Any borrowers who have already taken a previous payment holiday, will be able to top up the holiday to six months without this being recorded on their credit file.
The above extension also applies to consumer credit products such as personal loans and car finance.
High-cost, short-term borrowing, such as payday loans will continue to be entitled to a maximum one month payment holiday.
Statutory Sick Pay (SSP)
The Government is continuing to allow small and medium-sized businesses to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to Coronavirus. This includes employees self-isolating as a precaution and employees following advice to stay at home. Employees must earn on average at least £118 per week before tax. You can only reclaim two weeks per employee, even if that employee has to isolate more than once.
This refund will cover up to two weeks’ SSP per eligible employee who has been off work because of Coronavirus.
Employers with fewer than 250 employees will be eligible – the size of an employer will be determined by the number of people they employed as at 28 February 2020.
Employers will be able to reclaim expenditure for any employee who has claimed SSP (according to the new eligibility criteria) as a result of Coronavirus.
Employers should maintain records of staff absences, but employees will not need to provide a GP fit note for the first 7 days. After 7 days of absence, it is at the discretion of the employer.
The eligible period for the scheme commenced on 14 March 2020, the day after the regulations on the extension of Statutory Sick Pay to self-isolators come into force.
Coronavirus related SSP can be reclaimed online at https://www.gov.uk/guidance/claim-back-statutory-sick-pay-paid-to-your-employees-due-to-coronavirus-covid-19
Difficulty paying HM Revenue and Customs (HMRC)
Self Assessment tax payments
HMRC has announced that taxpayers will not be charged late payment penalties on the 2019/20 Self Assessment tax liability providing that they contact them to arrange a payment plan prior to 1 April. The payment plan will allow monthly instalments to be made up to January 2022.
Tax returns must still be filed with HMRC by the extended deadline of 28 February 2021.
In order to take advantage of this, please contact the Time to Pay helpline on 0300 200 3822. Alternatively a payment plan can be made online using the Government Gateway account that was used for services such as the Self Employed Income Support Scheme. Please follow the online link HERE [set up a payment plan online]
Updated guidance on deferred VAT payments
Last year, at the beginning of the pandemic, HM Revenue and Customs (HMRC) allowed businesses to defer VAT payments that were due between 20 March 2020 and 30 June 2020.
HMRC have now released that businesses will have several options for making payment of any VAT that was deferred.
- Make payment in full prior to 31 March 2021
- Opt into a payment scheme via the new online service before 21 June 2021 (this service opens on 23 February)
- Contact HMRC for extra help regarding payment before 30 June 2021 by telephone on 0800 024 1222 – this option can be used by those who do not have a VAT Government Gateway
Interest will apply if none of these options are taken.
If the online service option is taken, there is conditions that must be met to take advantage of the scheme:
- All subsequent VAT Returns and payments must be up to date
- The first instalment will be due upon signing up to the scheme
- Pay instalments by direct debit over equal payments, depending on when they join dictates the number of payments as follows:
If you join by: Number of instalments
19 March 2021 11
21 April 2021 10
19 May 2021 9
21 June 2021 8
If you have any queries or issues then please contact one of our VAT specialists here.
VAT Reduced Rate
The VAT Reduced Rate for food and drinks has been extended to 31 March 2021.
Many restaurants and cafes have opened as a takeaway due to the impact of Coronavirus. We have highlighted some VAT considerations for hot and cold takeaway foods that could apply to you:
Hot takeaway food will continue to be subject to VAT at 20% (standard-rated).
Typical examples of food and drinks that are standard-rated if sold hot are:
- Chips sold on their own or as part of a meal
- Chinese, Indian and similar take-away meals and dishes
- Baked potatoes with a hot or cold filling
- Toasted sandwiches
- Cups of tea, coffee, chocolate etc
- Cups of soup
However some cold takeaway items can be zero rated for VAT purposes, examples include:
- Biscuits (biscuits wholly or partly covered in chocolate are standard rated)
- Chilled or frozen ready meals designed to be cooked at home
There are some food items that are standard rated regardless of how they are sold they include
- Ice cream
- Fizzy drinks
For further information or advice on how the rules on hot and cold takeaway food effect your business please contact us.
Cashflow Top Tips
Here are our top tips to help you deal with the challenges that you may be facing:
- Review your direct debits and standing orders to ascertain which payments are business critical.
- Determine whether your staffing levels are adequate and seek advice if you need to reduce the work force/hours. Utilise the Job Retention Scheme where possible.
- Understand what your debt obligations are (both for the business and the directors personally) and seek to negotiate payment holidays if appropriate.
- Seek rent payment holidays where possible.
- Speak to your customers to obtain payment dates for outstanding debtors – consider their ability to pay if agreeing to longer terms. For any customers who are not responding, consider getting in touch with our Recovery Solutions team.
- Negotiate with suppliers to ensure your ongoing orders can be sourced and delivered; identify alternative suppliers for any business critical item.
- Ongoing funding is likely to be a concern for many. If you cannot demonstrate to a funder that you have taken the above steps then it will be more difficult to obtain. Now is the time to take action, even if you have a buffer that may see you through a short period. Review lending options including the BBL and CBIL Schemes.
- Can you temporarily extend your overdraft facility?
- Contact your finance providers as soon as possible to discuss Hire and Lease Purchase payment holidays. It is always better to agree repayment holidays with your finance providers upfront as this should not affect your credit rating going forward.
- Are your vehicles off the road? Could you SORN them? Visit gov.uk/make-a-sorn to do so.
- Review your insurance cover
Consider reducing your level of cover to accidental damage, fire and theft if you are completely certain the vehicle(s) will not be manoeuvred or driven. If not, you should maintain full cover.
- Adhere to insurer requirements
Look carefully at your policy wording for any specific stipulations and follow any recommendations provided by your insurer, for example keeping your vehicle(s) in a securely locked compound.
The Chancellor has announced that the Self-Employed can now access Universal Credit basic allowance at a rate equivalent to statutory sick pay for employees.
What is it?
If you are on a low income or are out of work, the payment is intended to help with living costs.
- You’re on a low income or out of work
- You’re 18 or over (there are some exceptions if the claimant is 16 to 17)
- You’re under state pension age (or your partner is)
- You and your partner have £16,000 or less in savings between you
- You live in the UK.
How much will I receive and when?
- Universal Credit is made up of a standard allowance of £94.25 a week, and some people may be able to get additional amounts, due to their circumstances. This can include if they have children, or if they have a disability or health condition which prevents them from working, or need help in paying rent.
- The payment is usually made monthly – although this may be more frequent in Scotland.
What additional allowances are available in addition to the basic allowance?
- It’s possible to access independent benefits calculators online, in order to see how much you can get.
- Your circumstances are assessed each month, and changes in circumstances can affect how much you are paid for the whole assessment period – not just from the date that the changes are reported.
Universal Credit basic allowance has been increased by £1,000 per year (£19.23 per week).
Working Tax Credit has been increased by £1,000 per year (£19.23 per week).
Business Interruption Insurance Claims due to Covid-19
Since the beginning of the pandemic, many businesses have suffered a drop in income due to Government restrictions in place. Many businesses turned to their insurers to file claims under the Business Interruption clause in their insurance policies.
Many claims were declined due to various reasons, including not having positive Covid-19 cases on the business premises and local outbreaks not meeting the criteria within the policy.
The Financial Conduct Authority (FCA) have been battling in the courts against these decisions.
Today a Supreme Court ruling states that claims should now be reviewed, and Hiscox Action Group has hailed the ruling as a ‘massive boost’ to smaller businesses, with an estimated value of claims being £1.2bn.
If your business has experienced a decrease in turnover and you hold business insurance with Business Interruption cover, we advise that you contact your insurers as soon as possible.
If you have any queries, please do not hesitate to contact one of our team.