Yesterday, delivering his Summer Economic Update in Parliament, the Chancellor Rishi Sunak announced a package of measures to support job retention, as well as the creation of new jobs. From the employers' point of view, there were 3 key announcements, plus more for the unemployed, as well as for the hospitality and entertainment sectors which were hit especially hard by the pandemic. 1. Jobs Retention Bonus Over 9 million UK workers were put on Furlough in the past few months under the Job Retention Scheme. Now, in an effort to encourage employers to hire back furloughed workers, the Government will provide a £1000 bonus for each employee that is brought back from Furlough, as long as they are paid at least £520 per month on average between November 2020 and January 2021. The bonus will be paid as a grant to employers. Different to grants under the JRS, these grants are meant to benefit the employer, and are not meant to cover the employee's wages. 2. Kickstart Scheme The Kickstart Scheme is designed to increase job creation for young individuals entering the workforce. The Scheme will pay employers directly, covering new workers' wages for six months, plus an amount to cover overheads. The requirements are as follows: • Eligible new workers must be 16 to 24 years old at risk of long-term unemployment; • The employer must prove that the jobs are being created additionally to the ones existing; • The jobs must be paid at least the National Minimum Wage, for at least 25 hours per week. According to the Chancellor, this means that for a 24-year-old the grant will be around £6,500. Employers can apply to be part of the scheme from next month, with the first Kickstarters in their new jobs this autumn. 3. Apprenticeships & Traineeships Bonuses For the next six months, employers will receive bonuses as an incentive to hire trainees and apprentices. The bonuses will amount respectively to: • £1,000 to take on new trainees; • £2,000 per apprentice under 25 years old; • £1,500 per apprentice over 25 years old. For Hospitality, Tourism & Leisure: 5% VAT on most services across the hospitality sector: In order to facilitate the recovery of these sectors, which were hit the hardest by the pandemic, the Chancellor announced a VAT cut from 20% to 5% on food, accommodation and attractions. This includes: • Eat-in or hot takeaway food from restaurants, cafes and pubs; • Accommodation in hotels, B&Bs, campsites and caravan sites; • Attractions like cinemas, theme parks and zoos. This will be effective from next Wednesday (15 July 2020) to 12 January 2021. - More info here. Eat Out to help out: Additionally, for the whole month of August, participating businesses will be able to offer 50% off meals, up to a maximum discount of £10 per head for everyone, including children, Monday to Wednesday. Businesses will need to register through a website open next Monday, and will be able to claim the discounts back each week in August, with the funds paid into their bank account within 5 days. - More info here . Other measures The Chancellor's plan also looked at helping those who lost their job find a new one as soon as possible. In order to do this, they are doubling the number of Work Coaches in Job Centres. The announcement also included • a £2bn Green Home Grant, which covers part of the renovation costs to make houses energy efficient; • a £1bn investment to improve the energy efficiency of public sector buildings; • over £5bn in infrastructure construction projects; • Nil Rate Band of Residential Stamp Duty increased from £125,000 to £500,000. We expect additional announcements to be released in the coming days, outlining details of how to receive some of the Grants and Bonuses announced today. As usual, we will keep you posted via email and on this blog with the latest developments. Read the Governments Blog article here.
There is now a litte (just a little) more information available about the Self Employed Income Support Scheme that has been put in place by the Government.
This is just the first details of the scheme that has been announced this evening to support the Self Employed, this is just the bare bones of what is being set up and we do need to wait for more details. All Self Employed individuals who earn their money primarily from Self Employment and whose trading profits are below £50,000 will be eligible for this new scheme. Essentially the scheme will provide a taxable grant of up to 80% of the annual profit of your business based on the average profits for the business in the past 3 years up to a cap of up to £2500/month You will have needed to have submitted a Tax Return for year ending March 2019 to qualify and the Chancellor is allowing 4 weeks for those who have failed so far to submit to do so. The deadline was 31st January and so I anticipate that most people will have filed their returns, if you are in the category of not having filed them please do prioritise them now, I am available for a small number of new clients to assist with your accounts, should you need me then please do get in touch -once my order books are full I can ask some other Bookkeepers in my own networks if they have any capacity. The details of how this money will be released are not yet available and it may be early June before payments are received asn new systems shall need to be set up for this, but it will be backdated to 1st March and you can apply for Universal Credits and Business Interruption Loans. If you have less than 3 years of accounts the calculation will be based on the 1 or 2 years that you do have. If you have not been in self-employment over a year then you will need to be exploring options around Universal Credits etc is any other option will not be available I am unsure whether there will be any adjustment based on newer businesses who maybe lost money in their first year or two and only came into profit in the 2019 accounts, it would seem to me unfair to base their accounts on this basis but there may be little that can be done! For the record I am in this exact position so I am not being dismissive but the reality is that no one scheme can allow for every single evantuality and it's going to be a struggle to see how it can do without opening up to the realistic possibility of fraud. The Caveat to all of this is that the Chancellor has indicated that the taxes for the Self Employed may need to be reviewed in order to provide some parity with the Employed population, I personally do not think that this is unreasonable on the face of it and look forward to lots of debate and discussion with those who will want their cakes and to eat them.
Update (27th March 2020) the Government have released further information on how this scheme works, the brief version of this is: The Employees must be furloughed for a minimum of 3 weeks at a time. Because Furloughed workers are not working, the minimum wage does not apply. Amounts paid will include Employers NI & Pension Contributions as well as the Gross amount payable to the Employees, which will be subject to Tax & NI in the usual way. Employees on Sick or in Self Isolation should be paid using the SSP arrangements and the Furloughed when fit enough to return to work. However, in slight contradiction to the above, Employees who are shielding, in line with Gov't policy, can be placed on Furlough Employees can take part in Voluntary work, as long as this does not provide services that help towards revenue generation on behalf of the organisation. If workers are required to undertake Training during their period of Furlough it would be necessary to ensure that they are paid at or above the relevant Minimum wage for their age/category. The 80% is generally calculated on either the same months earnings from their previous year or the average monthly earnings for the 2019-20 tax year. If your Employee is on unpaid leave and was placed/went on unpaid leave before 28th February 2020 then they are not eligible to be Furloughed. The above is just a few of the bullet points from the Government document that they released last night, if you wish o read it in full you can find it here . Support for businesses and employees through the Coronavirus Job Retention Scheme. Under the Coronavirus Job Retention Scheme, all UK employers will be able to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis. Eligibility All UK businesses are eligible. How to access the scheme You will need to: designate affected employees as ‘furloughed workers,’ and notify your employees of this change - changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation 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) Once these arrangements have been finalised rest assured I will put the info on here. To qualify for this, the employee must NOT wok for the employer while they are furloughed therefore it is important not to claim furlough for your salaries across the board if some of the staff are still required/needed to work during this period. HMRC will reimburse 80% of furloughed workers wage costs, up to a cap of £2,500 per month. HMRC are working urgently to set up a system for reimbursement. Existing systems are not set up to facilitate payments to employers. It is at the discretion/capabilities of the employer as to whether they are able to make the relevant workers salaries up, to no more than their full salary (at the moment it isn't clear whether the calculations are more on a basic salary or whether it includes overtime payable, my suspicion is that it will be on basic only or an average over a period, e.g. 3 months. This scheme is backdated to 1st March and runs for 3 months in the first instance with the likelihood that it will be extended if required. The chancellor was clear that there is no upper limit/restriction on the amount of money he would make available for this. If your firm has a Business Interruption Scheme you would need to be very careful that you do not commit fraud by claiming both, it is a principle of all insurance that you declare any other source of money being sued to make up the income, it will almost certainly be the same for businesses wishing to claim this funding. If you are considering needing to take this step we have a Letter template that you can use for your workers you can find it here .
Commercial tenants who cannot pay their rent because of COVID-19 will be protected from eviction. These measures will mean no business will automatically forfeit their lease and be forced out of their premises if they miss a payment up until 30 June. There is the option for the government to extend this period if needed. This is not a rental holiday. All commercial tenants will still be liable for the rent. Commercial tenants are protected from eviction if they are unable to pay rent. Eligibility All commercial tenants in England, Wales and Northern Ireland are eligible. How to access the scheme The change will come into force when the Coronavirus Bill receives Royal Assent. No action is required.
VAT Payment Deferral, for VAT registered Business the Government are introducing a VAT payment deferral The deferral will apply from 20 March 2020 until 30 June 2020. Eligibility All UK businesses are eligible. How to access the scheme This is an automatic offer with no applications required. Businesses will not need to make a VAT payment during this period. Taxpayers will be given until the end of the 2020 to 2021 tax year to pay any liabilities that have accumulated during the deferral period. VAT refunds and reclaims will be paid by the government as normal. It is important to note that this money will be expected to be paid over as it has been collected on behalf of HMRC and, although it may be possible to enter into arrangements to repay over a period of time there may be fines and penalties for those who do not pay at the correct time unless other arrangements are agreed
At the start I want to say that, yes I am aware that the Government seem to be leaving those of us who are self employed out of things a little, to be honest, it doesn't worry me (and I am self employed myself) it also should not worry you, the reason? I firmly believe that the Government have been addressing issues in order of priority, it is my belief that within the next couple of weeks we will see real and substantial financial help offered to those of us who are self employed but their first priority was to keep businesses afloat and keep their employees assured that finance was in place to support them, just by the sheer numbers and the fact that there was real danger of good employees being left with no money and the benefits system being overwhelmed by the numbers of claimant involved. For us, any support is going to have to come through either local or Central government so securing the boundaries for the others was essential. But at the moment I shall outline what is already in place to support the Self Employed...
Funding and Finances for Businesses: Funding Rounds might be especially hard to successfully close, which means you might need to consider cash injections from other sources. We’ve outlined some options which can help you find funding more quickly than closing an equity investment round (which usually takes 4-6 months): 1. Director and shareholder loans The easiest and quickest way to inject funds into your business. Typically these are recorded as short term loans rather than equity, and they can be repaid once the company is in a better cash-flow position. Note: check your articles/shareholders agreement for any approvals required at board or shareholder level. 2. Operating cash flow New customers – can you negotiate payment in advance or at least payment in instalments? Existing customers – can you offer customers early payment discounts? Or consider invoice discounting or invoice factoring to get paid outstanding invoices quicker for a fee (typically 2-3% each time). We’ve set up a webpage with our partner Swoop that can match you with invoice financiers. HMRC Time To Pay – Businesses affected by the coronavirus that have outstanding tax bills they cannot pay because of the outbreak may be able to agree bespoke payment terms through the HMRC Coronavirus Helpline. At the moment HMRC can agree to defer the payments for PAYE and NICs with no penalties for late payments. However, the official line from HMRC is still that the interest charge of 3.25% will still accumulate on late payments. 3. Grants & credits £10,000 cash grant for SBRR eligible companies – Small Businesses that operate within premises with a rateable value under £15,000 are eligible benefit from Business Rate Relief. The Government is going to provide these companies with a £10,000 cash grant. This is primarily targeted brick and mortar retailers. more info on the Gov.UK COVID-19 page. Statutory Sick Pay Refund – For businesses with fewer than 250 employees, the cost of providing 14 days of statutory sick pay per employee affected by the coronavirus will be refunded by the government in full. More info on Gov.uk, Se separate post on this matter. R&D Tax Credits – The average Innovative UK SME claims £45k p.a. back on qualifying R&D spend. We can help you submit a claim, get in touch with us for more information. Note, there are organisations that will advance R&D Tax Credit monies typically for an overall cost of 3-5% of the borrowed amount plus circa 1% pcm in interest. Innovate UK – Worth keeping an eye on the Innovate UK competitions page to see if there are grants that could be applied for. Note this is paid in arrears though so won’t alleviate immediate cash flow pressures. 4. Loans / Debt The Coronavirus Interruption Loan Scheme – Launched by the Government in response to the COVID-19 pandemic, the scheme will allow companies with a turnover up to £41m to borrow up to £1.2m. The Government will back 80% of any losses, allowing companies affected by the emergency to access extra liquidity in a time of need. The loans will be delivered by the British Business Bank “in a matter of weeks”. This is all we know at the moment, we will keep this page updated, and you can check updated information on the British Business Bank’s official website. SME Loan Search – We’ve set up a webpage with our partner Swoop that can match you with suitable debt products. The number of options for debt products available to SMEs has grown quite considerably recently. Start-up Loan Scheme – The government operates a start-up loan scheme where the business can borrow up to £100k (up to £25k per director, max 4 directors) as a business loan repayable over 4 years with an interest rate of 6%. There’s no personal guarantees, but if the business does not succeed, then any outstanding payments are repaid by the directors personally over the remaining term of the loan. If you think you are eligible, we recommend applying either through Outset Finance or Virgin Start-Ups. Revenue-Based Loans – Our partner Uncapped provides loans of £10k-£1m to businesses that process payments online with monthly turnover >£25k (e.g. ecommerce, subscription models, D2C, apps, SaaS… One flat fee (6%), no interest, no equity, no hidden charges and no personal guarantees. Check if you qualify. 5. Equity financing If you have pledges for investment, then we recommend you get the funds in now using an Advance Subscription Agreement. It’s a very straightforward 2-page letter, generally EIS/SEIS compliant for investors. Note, under an ASA it is common to offer a discount of 10% on the final investment share price.
Support for businesses who are paying sick pay to employees The Government are bringing forward legislation to allow small-and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The eligibility criteria for the scheme will be as follows: this refund will cover up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19 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 of 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 COVID-19 employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website eligible period for the scheme will commence the day after the regulations on the extension of SSP to those staying at home comes into force the government will work with employers over the coming months to set up the repayment mechanism for employers as soon as possible Eligibility You are eligible for the scheme if: your business is UK based your business is a small or medium-sized and employs fewer than 250 employees as of 28 February 2020 How to access the scheme A rebate scheme is being developed. Further details will be provided in due course once the legalisation has passed.