News & Insights

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.

Since the outbreak of Covid-19 there have been a lot of Government updates outlining the support being offered to businesses to help them during this unprecedented time. The Government are trying to create ways to aid businesses and relieve potential financial stressors during a time of business closures and population isolation.

For any questions you may have, the Government have now created a Government Business Support Page where you will be able to access up to date information as it is distributed daily.

www.businesssupport.gov.uk/coronavirus-business-support/

Please give us a call before you take action, so we can discuss your position and provide further information around the support available to you.

For any further questions you may have or to gain a better understanding, please contact us on enquiries@advaloremgroup.uk

We wanted to share with you and keep you up to date on any Government changes and what they may mean for you or how they may benefit you. We have outlined below updates on the Coronavirus Retention Scheme along with further announcements regarding VAT and other taxes, and how these changes may help you moving forward.

Coronavirus Retention Scheme

The government has announced an emergency grant to pay employee wages.

Who is eligible?
All UK businesses operating a PAYE scheme – (small or large, charitable or non-profit – will be eligible for the scheme).
This covers:

• 80% of wages for any staff you retain but who can’t work because of COVID-19.
• A maximum of £2,500 per employee, per month.
• Back dated to 1^st March 2020.
• As much as three months, until otherwise advised.

The employers will need to:

• Designate affected employees as ‘furloughed workers’ and notify the employees of this change.
• Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal. (HMRC will set out further details on the information required as soon as possible).

What are furloughed workers?

In this case that means anyone asked to stop working during the coronavirus pandemic but not made redundant. (so still on the payroll system).
HMRC are working urgently to set up the system for reimbursement. We will provide an update as soon as this is in operation.

We are currently waiting confirmation but hope to be able to update HMRC regarding furloughed workers on our clients behalf where we provide payroll services.

VAT

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. This is an automatic offer and so no applications are required. However, you will still need to submit your VAT returns on time.  Any VAT refunds due should still be repaid back during this time.

If you do still wish to pay your VAT bill, you are still able do so.  We are currently waiting to see if you have to cancel your direct debit payment, or whether HMRC can put a stop on them if you have direct debit set up.

Self-Assessment

HMRC have also announced they are deferring the payments on account payable in July 2020 to January 2021. Again, this is an automatic offer so no applications needed, and any interest/late payment penalties will not be charged.

Support for Businesses that pay Business rates

The Government is introducing a business rates holiday for retail, hospitality and leisure businesses in England for the 2020 to 2021 tax year.

Businesses that received the retail discount in the 2019 to 2020 tax year will be rebilled by their local authority as soon as possible.

You are eligible for the business rates holiday if:

• your business is based in England
• your business is in the retail, hospitality and/or leisure sector
• Properties that will benefit from the relief will be occupied hereditaments that are wholly or mainly being used:
  • as shops, restaurants, cafes, drinking establishments, cinemas and live music venues
  • for assembly and leisure
  • as hotels, guest & boarding premises and self-catering accommodation

How to access the scheme:

Again, this is an automatic offer so no applications needed. Local authorities may have to reissue your bill automatically to exclude the business rate charge. They will do this as soon as possible.

Three month mortgage holiday:

Homeowners and landlords can now apply for a three-month mortgage holiday by contacting their lenders. The Government have introduced this opportunity to help ease the stresses that borrowers are experiencing during the Covid-19 outbreak.

The 3 month holiday is only a pause in payments and you will still be required to pay the money at some point. The payment holiday is available to all homeowners who are up to date on their mortgage payments and to buy-to-let landlords whose tenants have been financially affected by the coronavirus.

Landlords who take payment holidays are expected to pass on this relief to their tenants. Homeowners who are in arrears on their mortgage should contact their lender, who will review any changes to their circumstances and discuss their options.

Other Taxes (PAYE, Corporation-Tax)

If you have any questions, our team are available at enquiries@advaloremgroup.uk

With the recent outbreak of Convid-19, the Government have been tackling methods as to how to continue to support the economy and protect businesses. On Tuesday, Chief Treasury Secretary Steve Barclay announced that the extension of the off payroll working rules to the private sector will be delayed and come into effect in a year’s time.

The Treasury had maintained that these new changes were fundamental to addressing “fundamental unfairness” surrounding non compliance with the current IR35 rules.  These measures would have seen every medium and large private sector business becoming responsible for determining the status of any contract worker.

Barclay confirmed that the Government have introduced this change to protect the economy and this is not a cancellation of IR35 which is still due to come into effect on 6^th April 2021. Due to the economic uncertainty, the Government feel that the effects of IR35 and the potential extra spending it would cause businesses would add to the current stress felt by the population.

This push back will give private sector businesses extra time to prepare for IR35 and to make the relevant changes ready for its introduction next year.

Of course, this does not postpone IR35 completely but for the time being it remains the contractor’s obligation to review their own employment status.