Covid-19 Updates

Updates to the Job Retention Scheme 

To confirm you can claim for furloughed employees that were on your PAYE payroll on or before 19^th March 2020, that were notified to HMRC on an RTI submission. Employees on payroll that were employed as of 28^th February 2020, but were made redundant or stopped working after that and prior to 19^th March 2020, can also qualify for the scheme if the employer re-employs them and puts them on furlough.

We have now been updated on some of what can be included in the claim for the Job Retention Scheme grant.

In summary employers can claim apart from wages, the below:

• Past Overtime
• Fees and compulsory commission payments.

What is still not included:

• Discretionary Bonus (including tips)
• Commission payments and non-cash payments.
• Non-monetary benefits including taxable Benefits in Kind.
• Salary Sacrifice Schemes (including pension contributions), that reduce an employee’s taxable pay.

Where the employer provides benefits to furloughed employees, this should be in addition to the wages that must be paid under the terms of the Job Retention Scheme.

For further information on:

• Apprentice Pay
• Apprenticeship levy and student loan
• National Minimum wage

Please follow this link to the Government Guidance:
https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

Please note: the government portal is not yet accessible and we await confirmation of the exact date this will be available. As soon as it is, we will provide further details.

Our payroll team are dealing with an unprecedented amount of calls at the moment so please bear with them if you are waiting for a call back. They are also dealing with the end of the tax year paperwork so where your query can be answered by another member of the team, we would recommend you speaking with your client manager in the first instance before calling the payroll team. Please be assured that your queries will always be answered.

Directors

There have been three main questions we’ve been focusing on when looking at the Job Retention Scheme for directors:

1.     Can directors be furloughed?
2.     Does this cause a problem with National Minimum Wage?
3.     Does this cause a problem with not having a contract?

After further clarification, our current understanding is that directors can be furloughed.

A director is not a “Worker” for the purposes of National Minimum Wage, as they do not have a contract of employment.

However, for furloughing purposes directors are included in the definition of employee (and employee and worker are not the same), therefore directors can be furloughed.

As a furloughed director, it is okay to continue with your statutory duties, e.g. filing accounts at companies house, but you must not work outside of the statutory duties. You cannot be marketing or continuing to try to generate income or future income for the business.

Directors who are furloughed are subject to all stipulations of the Job Retention Scheme.

Click here to see our most up to date COVID-19 Business Support Guide.

The Government have released additional updates to the Small Business Grant Scheme. Read below to see if you are eligible to apply for your business grant now!

It was originally stated that local authorities would contact businesses eligible to receive a grant in the Small Business Grant Scheme or retail, hospitality and leisure sectors.

However, some local authorities have decided to operate an applications process, so you are now able to submit your information to the local authority for them to access your eligibility and pay your grant.

I have included details below of some local authorities who are now taking applications. If your local authority is not listed here, or you are unsure which local authority you fall into, please check by searching here: Local Authority Search – you may be able to apply for your business grant now!

We have also updated our COVID-19 Support Brochure with the Government changes!

Following our blog updates over the last week or so, we have been following the news and announcements carefully to gain further clarification around some of the government support. Please see further clarification around the Job Retention Scheme and VAT below.

Job Retention Scheme – updated information:

The government has announced plans for financial assistance to help employers pay employees who are not working, to avoid redundancies. Please note that this scheme is subject to continual review, dependant on Government guidance.

What is the job retention scheme?

The scheme involves employers designating employees as “furloughed workers”. The employer needs to gain agreement from the employee to do this, unless it’s covered by a clause in the employment contact.

An employee will stay “employed” whilst furloughed, but they must not work during this time.

Who is eligible?

All UK businesses operating a PAYE scheme – small or large, charitable or non-profit – will be eligible for the scheme.

How does the scheme work?

The scheme pays a grant to the employer (not a loan), through a new online system which is currently being built. The system is expected to go live before the end of April.

Furlough is backdated from 1^st March 2020 and will be available for at least 3 months and may be extended by government. Even though the scheme is backdated to 1^st March, an employer will only be eligible to claim the grant once they have agreed the furlough status with their employees and employees must have stopped working for the employer. Please bear in mind that employee status is subject to employment law in the usual way.

Until the new system is live and grants have been paid, employers are expected to bridge the gap and pay furloughed employees. Please contact us if you are concerned about cashflow and making these payments.

What is covered by the grant? 

The grant will be calculated per furloughed employee and will be the lower of:

• 80% of “wages costs to the employer”. Our current understanding is that this includes employers’ NIC and pension contributions, however, we are waiting for further clarification.
• £2,500 per month (including employment costs e.g. salary, employer pension contributions required by auto-enrolment (if applicable) and employer NIC.)

Further considerations
As an employer you are able to decide if you wish to pay the furloughed employees 80% of their wages, or top up the grant to the full 100% – essentially costing you 20% of the wage costs.

I appreciate being an employer can be lonely, so if you would like to talk through your thoughts, please give us a call.

How will this affect payroll?

The employer will pay the employee through payroll and submit Real Time Information (RTI) in the usual way, as required by the employment contract.

VAT deferred payments – updated information:

What is the deferral period?
HMRC have advised that any VAT payable from 20^th March to 30^th June 20 is deferred until the end of the 20/21 tax year. E.g. VAT which is due and payable on 7^th April, 7^th May and 7^th June 2020.

Do I need to apply for deferral?
This is an automatic offer and so no applications are required. However, you will still need to submit your VAT returns on time.

Will I still receive a refund, if I’m due one? 
Any VAT refunds due should still be repaid back during this time.

Can I still pay may VAT bill?
If you do still wish to pay your VAT bill, you are still able do so.

Do I need to cancel my VAT Direct Debit:
Yes. If you do not want to pay your VAT during this period, you will need to cancel your VAT direct debit ASAP.

When will the revised VAT payment be due?
Our current understanding is that for any VAT liabilities accumulated during the deferral period will be given until 31 March 2021 to pay.

If you have any questions regarding the Job Retention Scheme or VAT deferral, please contact your manager or email: enquiries@advaloremgroup.uk

As soon as more information about the new online system for the Job Retention Scheme has been announced, we will update our Covid-19 blog and you as soon as possible.