Clarke Nicklin Business Update
I hope everyone is still keeping safe and well.
We had a flurry of activity in terms of governmental announcements at the start of lockdown in relation to businesses and support packages to businesses, with that having settled down for a period of time through the main part of lockdown. It certainly feels we are now in a very different phase with regard to businesses and factors both having an immediate implication, and also businesses needing to assess for the medium and longer term.
Clearly some businesses in certain sectors remain very significantly affected, without the ability to operate to any significant degree. However, more businesses, trades and professions are either considering how they are best operating under a more relaxed lock down, albeit still with the need to ensure social distancing measures are put in place, or are looking at getting operational again.
The government are clearly, and understandably, keen to try and get business activity under way to assist with the overall economy of the country, whilst at the same time needing to recognise support measures need to continue.
An extension and a more flexible position on the furlough scheme has therefore been announced which comes into place from 1 July to allow part time working. In my opinion, this would have been good to bring into place immediately. We are aware of many clients where this flexibility would meant they were more able to look at phased returns of staff, whereas currently a full time return with full costs does not quite stack up financially for them. In addition, the Self Employed Income Support Scheme has also been extended to allow a further second claim.
Many businesses attentions have now therefore turned to needing to reassess their potential income levels against their cost base, and balance this against looking at claims under the support measures to assess how they manage their financial position. Clearly, office and work environments need assessing also, which may have an impact on cost bases, both in the short term and long term. We are helping clients with this process both in terms of assessing how their cost base might be affected, but also the more longer term strategic considerations for some businesses where there thoughts are already turning to how they operate under a “new normal” in the future. Please get in contact with us for any advice and support in this area.
Hopefully both for the sake of the health of the country and also the health of the economy, there wont be an increase in the “R” number, meaning more easing can take place and businesses can be clear on their planning and strategy for the future.
Details of the recent changes to measures announced are as follows.
Coronavirus Job Retention Scheme (CJRS)
The Chancellor stated that in June and July the furlough scheme will continue as before, but employers will be asked to cover National Insurance and employer pension contributions in August.
By September, businesses will pay 10% of wages for furloughed staff, and in October 20%, the UK chancellor said.
This means the subsidy will taper off from August, with businesses expected to pay a greater share of their staff salaries, starting with covering National Insurance and pension contributions.
From September the government will cover only 70% of salaries, to a cap of £2,190 and from October it will pay 60%, to a cap of £1,875. Employers will make up the shortfall to get salaries back to 80% of pre-COVID lockdown levels.
After that, the scheme will close.
Flexible Furloughing of employees
From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked. When claiming the CJRS grant for furloughed hours employers will need to report and claim for a minimum period of a week. You will be required to submit data on the usual hours an employee would be expected to work in a claim period and actual hours worked. We can assist and make the claims for you.
If your employees are unable to return to work, or you do not have work for them to do, they can remain on furlough and you can continue to claim the grant for their full hours under the existing rules.
The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3-week period prior to 30 June.
This means that the final date by which an employer can furlough an employee for the first time will be 10 June, in order for the current 3-week furlough period to be completed by 30 June. Employers will have until 31 July to make any claims in respect of the period to 30 June.
Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.
Self-Employed Income Support Scheme
The government’s Self-Employment Income Support Scheme will be extended, giving more security to individuals whose livelihoods are adversely affected by coronavirus in the coming months, the Chancellor announced on Friday 29 May 2020. Rishi Sunak announced the Self-Employment Income Support Scheme will be extended – with those eligible able to claim a second and final grant capped at £6,570.
• Individuals can continue to apply for the first SEISS grant until 13 July. Under the first grant, eligible individuals can claim a taxable grant worth 80% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £7,500 in total. Those eligible have the money paid into their bank account within six working days of completing a claim.
• Applications for the second grant will open in August. Individuals will be able to claim a second taxable grant worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.
• The eligibility criteria are the same for both grants, and individuals will need to confirm that their business has been adversely affected by coronavirus. An individual does not need to have claimed the first grant to receive the second grant: for example, they may only have been adversely affected by COVID-19 in this later phase.
Further guidance on the second grant will be published on Friday 12 June and we will keep you up to date with the details when we know them.
Tax Free Childcare and 30 Hours Free Childcare During Coronavirus
To help make sure critical workers can continue to access the childcare they need to enable them to work, even if their circumstances have changed during the Pandemic, the Government have made some temporary changes.
Find out about temporary changes that may affect you if you are applying for, or already getting, Tax-Free Childcare or 30 hours free childcare here.
The changes may affect you if you, or someone you live with, are:
• on furlough
• not able to work or you are working less
• a critical worker
If you are on furlough:
If your employer has no work for you they might be able to keep you on the payroll and put you on temporary leave instead. This is known as being put ‘on furlough’ and you are paid 80% of wages through the Coronavirus Job Retention Scheme.
You should apply, or reconfirm if you already have a childcare account, if your wage, and your partner’s wage if you have one, is:
• at least the National Minimum Wage for 16 hours a week
• below the normal minimum income requirement, but you would normally expect to meet the income requirement
If you are not able to work or you are working less
You should apply or reconfirm if you already have a childcare account if you are:
• getting sick pay or statutory sick pay (SSP) – time spent on sick pay or SSP will count as working and meeting the minimum income requirement
• taking unpaid leave to care for others, such as your children – if you expect your income to meet the minimum income requirement (at least the National Minimum Wage for 16 hours a week) after coronavirus
• living with someone who has coronavirus – you must stay at home – if you expect your income to meet the minimum income agreement (at least the National Minimum Wage for 16 hours a week) after coronavirus
• working less, your hours have been reduced and your wage:
• meets the minimum earnings requirement
• is below the normal minimum earnings requirement but you would normally expect to earn above it
If you are self-employed
You should apply or reconfirm if you already have a childcare account if you are:
continuing to work, and your earnings:
• are above the minimum earnings requirement
• are below the normal minimum earnings requirement but you would normally expect to earn above it
Not able to get work because of coronavirus:
• you may be eligible to claim a grant through the Self-Employment Income Support Scheme – payments made to you through the scheme will count as earnings
• and you are not eligible for self-employed income support but would expect to earn at least the minimum income requirement
If you are claiming Universal Credit
If you are now claiming Universal Credit and were getting:
• Tax-Free Childcare, you cannot apply or reconfirm for Tax-Free Childcare – if you stop claiming Universal Credit you can apply for Tax-Free Childcare again
• 30 hours free childcare, and you meet the revised minimum income requirement or would expect to normally, you should apply or reconfirm if you already have a childcare account
If you missed the 31 March deadline
If you have missed the application or reconfirmation deadline for 30 hours free childcare, you should apply or reconfirm if you already have a childcare account. Local authorities will be able to extend the validity dates on 30 hours codes for eligible critical worker parents during the summer term.
If you are a critical worker and If you are working more
If you are a critical worker you may have exceeded the maximum income threshold of £100,000 per year – If this is because of increased hours as a direct result of coronavirus, you will still be eligible for 30 hours and Tax-Free Childcare for the current tax year.
Please get in contact with us if you have any questions in relation to the above.
Keep well and stay safe.