With so much information being published by the Government on the support available to both the self-employed and small businesses around Coronavirus (Covid-19), we thought it would be worth clarifying some of the most frequently asked questions.
Job Retention Scheme
Who is eligible for the Job Retention Scheme?
Any employee who has been on PAYE since 28 February 2020, this can include part-time, full-time, agency and zero-hour contracts. The scheme will also cover those who were made redundant since the 28 February 2020 and subsequently re-hired.
Do we need to furlough everyone in the business?
No, you can decide who will be furloughed depending on which areas of the business have seen a drop in work levels. Please do remember to think about the Equality Act as this and all Employment Law will apply to this situation. Our HR partners at Adastra can provide you with any advice needed in this area.
What are the timescales for furloughing an employee?
A worker will need to be furloughed for a minimum of three weeks (this is consistent with the public health guidance to achieve social distancing) the scheme has been out in place to help businesses to support the Government in achieving this.
Can I just reduce the hours of my staff?
This is something you can do but you would need to consult with your staff first and amend their pay accordingly, you will not be able to claim the 80% furlough payment.
What does the Furlough payment cover?
The 80%, up to a maximum of £2,500, will cover all employers’ costs so wages, employers’ NI contributions and minimum automatic enrolment pension contributions. It will also only include basic salary amounts so bonuses and over-time payments will not be included.
Will I have to top up the remaining 20% of salary?
No there is not an obligation however you should consult with your employees over this change and ensure everything is put in writing and ask your employee to sign in agreement.
Do staff have to pay tax on the 80% salary?
Yes, Income Tax and National Insurance will still need to be paid on any payments received.
What about staff who are self-isolating?
These employees will continue to receive SSP (Statutory Sick Pay), then can they move over to Furlough on their official return date. SSP is only applicable when employees are displaying symptoms of Coronavirus (Covid-19) or their household are showing symptoms.
What happens to those employees on maternity leave?
For those just about to take or are currently on maternity leave then the usual maternity policy still applies. Those employees currently on maternity leave can in principal return to work earlier and be put straight on Furlough, if both the employer and employee agree to this.
Are Directors of a Limited Company entitled to be furloughed?
Executive Directors, who are employees, can be placed on Furlough leave based on the PAYE salary they have received. Unfortunately, other income received through other sources such as dividends will not apply.
Income Support Scheme
Who is eligible for the Income Support Scheme?
Any self-employed person who has trading profits below £50,000 and make most of their income from self-employment. You will need to have been in self-employment before the 5 April 2019 and have a tax return for 2019 to apply.
What does the Income Support Scheme cover?
Self-employed workers will have 80% of their average earnings (up to £2,500 per month) paid for by the Government.
When will I receive my payment?
The arrangements should be up and running by the beginning of the June so the self-employed will have some time to go before they can receive any cash.
Will I still need to pay tax on my payment?
Yes, the grant will still be taxable since it is based on your last previous taxable income.
How do I apply for the payment?
HMRC will contact all eligible self-employed people directly with an online form once the scheme is up and running. A lump sum covering the three months (March, April and May) will then be paid directly into bank accounts.
What information will I need to provide?
At this stage the information needed has not been confirmed but we suggest pulling together the following, so you are fully prepared:
- Your taxable income from 2016-2017, 2017-2018 and 2018-2019 (if you have not yet submitted your 2018-2019 tax return you now have a four-week grace period to complete this).
- You bank details, NI number and/or HMRC UTR number, DOB and address.
Business Interruption Loan
Who is eligible for the Business Interruption Loan?
Any business with a turnover of less than £45million per year.
How much is available through the Business Interruption Loan?
A Lender can provide up to £5milliion in the form of term loans, overdrafts, invoice and finance and asset finance. The Scheme provides the Lender with a Government-backed partial guarantee whilst the borrower remains liable for 100% of the debt.
How do you apply for the Business Interruption Loan?
You can apply for the Business Interruption Loan through one of the many Lenders operating the scheme, a full list can be found here.
What are the terms of the Business Interruption Loan?
The lending term will be for a period of six years with 12 months as the interest free period.
What information will I need to supply with my Business Interruption Loan application?
There is quite a lot of information required, those applications which have full details will be prioritised first, so we suggest pulling all this together before making your application. The list includes:
- Up to date management accounts.
- Last 12 months VAT returns.
- Last three years’ full accounts with full P&L.
- Last 12 months business Bank accounts statements, some may also ask for personal statements.
- Aged debtor and creditor lists.
- Confirmation of any outstanding debts (provider, term and repayment).
- Statement of personal assets, liabilities, income and expenditure from all Directors.
- Home addresses of all Directors and Shareholders.
- A summary of how Coronavirus (Covid-19) has affected the business so far and how the funds will be used e.g.: to cover staff costs.
Do I still need to file my VAT return for this period?
Yes, you still need to continue to file your usual VAT return for the period of the 20 March 2020-30 June 2020. The payment will still be deferred but please ensure you cancel your Direct Debit for payment to HMRC.
Can all businesses defer their VAT payment?
Yes, all businesses can defer their VAT payment for the period of the 20 March 2020 – 30 June 2020, just remember to cancel your Direct Debit payment to HMRC.
Can I still receive my VAT refund owed from HMRC?
Yes, any VAT re-payments owed from HMRC will still be paid.
Small Business Grant
How much is the Small Business Grant?
The Small Business Grant is worth £10,000.
Am I entitled to receive a Small Business Grant?
You will be eligible for the Small Business Grant if your business is based in England, you already receive Small Business Rate Relief and/or Rural Rate Relief and your business occupies a property.
How do I apply for the Small Business Grant?
If you are eligible for the Small Business Grant then your local authority will be in touch with you to arrange, you can also contact them to check.
Business Rates Holiday
Am I entitled to receive a Business Rates Holiday?
A Business Rates Holiday for the 2020 to 2021 tax year will be available to all businesses in the retail, leisure and hospitality sectors based in England.
How do I apply for the Business Rates Holiday?
If you are eligible for a Business Rates Holiday, then the discount will be automatically applied to your next Council Tax Bill in April 2020. Some local authorities may have to re-issue your bill to exclude your Business Rate charge.
How much will the Business Rates Holiday be?
You can calculate how much discount you will receive using this handy handy tool: https://www.gov.uk/calculate-your-business-rates
If you need help or support with any of the above questions, please contact the friendly team at Clear Vision on 01794 003 025 or email us.