Although we are able to work almost as effectively at home I do need to ask for your co-operation in helping us to meet all of your deadlines.

Self-Assessment Tax Returns

Where possible can any remaining information be sent into the office by email, eliminating the necessity for clients to come to the office to drop documents off.

Where this is simply not possible we are able to accept hard copy records providing our strict drop off procedure is followed. Donna will be situated on the Ground Floor in GLX’s empty office. If you please notify ahead via the usual Murrells office line (01603 617361) or by email (donna.martin@murrells.co.uk) you will be able to ring the buzzer for GLX and Donna will let you in. Outside of GLX’s office will be a “Quarantine Box” which you can deposit your records in without stepping inside and come into contact with Donna. Once you’ve left the office Donna will move these to a secure point and they will remain there for three days in quarantine before a member of the team comes to collect and carry out your work. As I’m sure you’ll understand this is an incredibly busy month for us even in usual circumstances, so the deadline for physical drop offs to guarantee your return is completed is next Friday 15^th January. Any records dropped off after this point will have to be quarantined for the same time period and will therefore run us close to the deadline should we receive a large volume after this date.

Payroll & CIS

Payroll and CIS returns will be processed as normal but can I please ask again that any information is sent in at the earliest opportunity to allow Racheal and Jan as much flexibility as possible to manage their workload. Working from home is never going to be a perfect substitute for our office environment and delivering information even a day or two earlier than usual can really help them.

VAT and Accounts

VAT and Accounts work will continue as normal and your usual point of contact will be available should you require any assistance. Again, please provide any necessary information by email where possible, if a physical drop off is required the above detailed drop -off procedure will also have to be followed for these services.

If you have any queries on the above please don’t hesitate to contact us, otherwise stay safe and we hope to welcome you back to the office later in the year.

Coronavirus Job Retention Scheme

The furlough scheme has been extended and will remain open until 31 March 2021.

Employees will receive 80% of their salary for hours not worked up to January 2021. The amount after January will be announced closer to the time. Employers across the UK can claim, whether their businesses are open or closed. Claims must be submitted within 14 days of the end of the month. Employees with a leaving date after 23 September 2020 can be reinstated.

Job Retention Bonus

Unfortunately, the planned retention bonus which would have paid £1k for each furloughed employee who was retained in employment has been scraped for now.

The chancellor has promised a new “retention incentive” which will be announced at an appropriate time.

Self Employed Income Support Scheme

There are a further 2 grants available for the Self Employed. The grants are available for 3 months and the periods cover November 2020 to January 2021 and February 2021 to April 2021.

Am I eligible?

• You must have been eligible for the first two grants in order to qualify, even if you did not claim them.
• You must declare that you intend to continue to trade and either are currently actively trading but impacted by reduced demand or you were previously trading but are unable to work due to coronavirus.
• The third grant will be 80% of 3 months average monthly profits (capped at £7,500) and will be available from 30 November.

Details of the subsequent grant are yet to be announced.

Bounce Back Loan

If you borrowed less that you were entitled to (between £2k and 25% of turnover), you can top up the existing loan to the maximum amount (£50k).

This will be available from 10th November 2020 until 31 January 2021.

What support is available? 

The extended CJRS will operate in the same way as before, with businesses being paid by the government to cover wage costs. The level of CJRS available will mirror the higher levels, prior to the reductions; 80% wages up to a cap of £2,500 and this will also cover employer’s NI and employer’s auto-enrolment pension contributions.

Employees can either be placed on furlough leave for their entire working pattern or employers can utilise the flexible furlough scheme, allowing for a part time furlough agreement with the employee. Worked hours will be paid by the employer as normal.

Employers can chose to either reduce employee’s pay to 80%, subject to agreement from the employee, or top-up the government contribution to pay in full.

Am I eligible?

For employers to be eligible, they must have:

• A UK bank account
• A UK registered PAYE scheme

For employees to be eligible, they must have:

• Been on payroll by midnight on 30 October 2020 (RTI submission made before this date)
• Be placed on furlough for a minimum period of 7 days

There is no requirement for the employer or employee to have utilised the earlier version of this scheme prior to this point.

If you have any questions please get in touch and we will be happy to discuss.

Working from home tax relief is usually worked out on a per week figure which you can then multiply over the course of a year to a maximum of £62 for those in the lower tax bracket or £124 for those in the higher tax bracket. However due to the huge increase in claims this year from the Coronavirus Pandemic, HRMC have set up a simpler system for this year only which allows you to claim the maximum amount as long as you have worked at home ‘some of the time’ (link to external MSE).

The total relief is £6 per week, which equates to a gain of £1.20 a week for a basic 20% rate taxpayer and £2.40 a week for a higher 40% rate taxpayer. You are unable to claim this additional relief if your employer is already paying you additional costs for working from home.

How to Claim Working From Home Tax Relief

The easiest way to claim is to head to the HMRC microservice that has been set up especially to support this new claim and can be found here. You are only able to claim as an employee of a company, those that fill out a self assessment tax return should detail their expenses there.

If you are unsure if you are able to claim, please get in touch and we are happy to talk this through with you.

Furlough

Unsurprisingly, the furlough scheme is coming to an end. This was always likely to happen and today’s announcements confirmed that the furlough scheme will cease at the end of October.

The amount that employers could claim dropped from 80% to 70% this month and will decrease to 60% for its final month in October.

We have processed a huge number of claims for clients so I would imagine you are all well covered, but If you do need any advice or help around claiming furlough up to the end of October, do let us know.

Job Support Scheme

Effectively replacing the furlough scheme is the new “Job Support Scheme” which will commence from 1 November 2020 and run for 6 months.

In order to be eligible for this, employees must work at least 1/3 of their normal hours. For those hours, they will be paid as normal by the employer.

For the employees remaining hours, the cost of this is split equally in to thirds. The employee loses 1/3 of the pay, 1/3 is paid by the employer and 1/3 is paid by the government.

For employees working 33% of their normal hours, they would receive 77% of their normal pay.

We will provide more information on this scheme and how to claim as soon as possible. It is suggested that the eligibility criteria for this scheme will be more stringent than the furlough scheme but most small / medium businesses are expected to be able to access it.

Employers will not be able to make redundancy notices to those workers who are on the scheme throughout its duration. This scheme is not expected to affect the job retention bonus either.

Loan Schemes

For businesses that acquired funding through either CBILS or Bounce Back loans, these can be extended from repayments over 6 years up to 10 years.

Businesses experiencing serious difficulties can apply to suspend payment or move to interest only repayments for a period of up to 6 months.

It is suggested that this will not have an adverse affect on credit ratings.

Furthermore, a new loan facility is due to be introduced in January 2021.

VAT

Businesses who deferred their VAT initially to 31 March 2021 will no longer have to pay a lump sum at the end of March. Instead, businesses will be offered the option of splitting the debt into smaller, interest free payments over the course of 11 months.

Additionally, the VAT rate reduction to 5% in the hospitality and leisure industries will remain until 31 March 2021.

Income Tax

For individuals struggling to pay their income tax bill due by 31 Jan 2021, if the debt is less than £30k, they will be able to go online and set up a payment plan to pay this debt over 12 months.

Debts over £30k need to be discussed with HMRC.

We hope you find the above information useful, but if you should have any queries please do not hesiate to contact the office on 01603 617361 or info@murrells.co.uk.

The scheme will allow you to claim a taxable grant worth 70% (down from the previous 80%) of your trading profits up to a maximum of £6,750.

HMRC will aim to contact those eligible in the same manner as they did in May / June so please keep an eye out for similar means of contact.

Even if you were not adversely affected by the pandemic and did not quality for the first grant, you are still able to apply for this second phase if you have since been affected.

Eligibility

In order to be eligible, your average self-employed trading profits must also be less than £50,000 and more than half of your income arises from self-employment. This is determined by at least one of the following conditions being true:

• having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income; or
• having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the updated 23 April 2020 deadline in the usual way.

Claim Details

In the same way as before, unfortunately we are unable to claim on behalf of our clients and any claims must be made individually using your Gov.uk login.

We hope you have a Gov.uk account, from your previous claim but if not please follow the instructions here.

Scheme Information

For the full, latest guidance available, please read the following HMRC weblink which should explain everything you should need to know regarding the upcoming claim process:

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#claim

Who is eligible to claim?

You can find more information on eligibility and claiming on our original post here.

HMRC will aim to contact you by mid-May 2020 if you’re eligible and invite you to claim using the GOV.UK online service. This is likely to be either email or letter. Payment will be made by early June 2020 if your claim is approved.

Eligibility

As a reminder to our previous email regarding this scheme (included below), if you are eligible, this scheme will allow you to claim a taxable grant worth 80% of their trading profits up to a maximum of £7,500.

In order to be eligible, your average self-employed trading profits must also be less than £50,000 and more than half of your income arises from self-employment. This is determined by at least one of the following conditions being true:

• having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income; or
• having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the updated 23 April 2020 deadline in the usual way.

Claim Details

Please note, HMRC have announced however that as agents we will unfortunately not be able to claim (through our agent portal) on your behalf and the amounts must be claimed individually using your Gov.uk login. We are therefore contacting you as early as practically possible to help you get prepared to submit this claim (Of course, if you would like us to assist you with the claim, we are more than happy to do so).

If you do not have a Gov.uk login account, we recommend that you set up an account as soon as practically possible in order to submit a claim. Please continue to read this email below where we have included a step-by-step guide of how to register for a government gateway.

If you’re unable to register online or unable to claim online (i.e. no internet access), HMRC have confirmed that an alternative way to claim will be made available. The details of this are currently unknown and HMRC are going to update their guidance on this in the next couple of days. We would assume this method to be via a paper form which although is still great, we firmly believe this will take longer for your claim to be approved and therefore would recommend the online submission method if possible.

Scheme Information

For the full, latest guidance available, please read the following HMRC weblink which should explain everything you should need to know regarding the upcoming claim process, including an online calculator which should come in useful in being able to calculate your claim:

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme#claim

Who is eligible to claim?

You can claim if you’re a self-employed individual or a member of a partnership and:

• you carry on a trade which has been adversely affected by coronavirus;
• you traded in the tax year 2018 to 2019 and submitted your Self-Assessment tax return on or before 23 April 2020 for that year;
• you traded in the tax year 2019 to 2020;
• you intend to continue to trade in the tax year 2020 to 2021

Your business could be adversely affected by coronavirus, for example if:

• you’re unable to work because you:
  • are shielding;
  • are self-isolating;
  • are on sick leave because of coronavirus;
  • have caring responsibilities because of coronavirus
• you’ve had to scale down or temporarily stop trading because:
  • your supply chain has been interrupted;
  • you have fewer or no customers or clients;
  • your staff are unable to come in to work

Those who are ineligible

This is a very challenging time and some people may be disappointed if they are not eligible.

HMRC have tried to identify who is eligible, however if you are not contacted, you will be able to ask HMRC for a review of your circumstances. HMRC will look at your case from 18‌‌ May and explain your eligibility by the end of May.

Alternative financial support may be found via the following:

• • delay VAT payments
  • delay Self-Assessment payment on account
  • arrange to pay Self-Assessment tax bill in instalments
  • get a payment from the Small Business Grant Fund (this support is specific to rates relief)
  • get a loan from the Business Interruption Loan Scheme or Bounce Back Loan
  • get Universal Credit
  • apply for Employment and Support Allowance (ESA)
  • apply for Child Benefit.

Possible Scams

We are aware that there has been an increase in scam emails, calls and texts. Eligible customers to the above scheme will be invited to claim through GOV‌.UK – it is the only service you can use. If someone gets in touch with you claiming to be from HMRC, saying that financial help can be claimed or that a tax refund is owed, and asks you to click on a link or to give information such as name, credit card or bank details, do not respond. It is a scam.

What information do I need in order to make a claim?

You’ll only need your:

• Self Assessment UTR – it will be printed on your tax return but if you do not have this find out how to get your lost UTR
• National Insurance number – if you do not have this find out how to get your lost National Insurance number
• Government Gateway user ID and password – if you do not have a user ID, you can create one when you check your eligibility online
• bank account number and sort code you want HMRC to pay the grant into (only provide bank account details where a Bacs payment can be accepted)

You’ll have to confirm to HMRC that your business has been adversely affected by coronavirus. If you claim the grant HMRC will treat this as confirmation you’re below the state aid limits. HMRC will check claims and take appropriate action to withhold or recover payments found to be dishonest or inaccurate.

What do I do once I have made a claim?

Once you’ve submitted your claim, you will be told straight away if your grant is approved. HMRC will pay the grant into your bank account within 6 working days.

You must keep a copy of all records in line with normal self-employment record keeping requirements, including:

• the amount claimed
• the claim reference number for your records
• evidence that your business has been adversely affected by coronavirus.
  • HMRC haven’t specifically detailed what this evidence may entail so we set out some possible examples below;
    • Reduced levels of sales invoices and income in to the bank
    • Reduced mileage / subsistence expenses indicating a reduction in work
    • Correspondence with accountants / banks / insurers to inform them of reduced activity
    • Correspondence with customers informing you of cancelled jobs
    • Proof of confirmed work / tenders which fell through due to Covid-19
    • Proof that you sought work elsewhere or claimed universal credit to cover the shortfall in income

You will need to report the grant:

• on your Self-Assessment tax return
• as self-employed income for any Universal Credit claims
• as self-employed income and that you’re working 16 hours a week for any tax credits claims

You will also need to have a Government Gateway, if you do not have one of these then please follow this link.

Detailed below is our previous email regarding Self Employment Income Support Scheme.

Following on from our previous email updates regarding the support that the UK Government are putting in place, please find below an update specifically focusing on anyone who is self-employed or a partner of a partnership. The Government have announced a financial support package also known as ‘Self-employment Income Support Scheme’ (SEISS).

Please note that before reading the below, this does not apply to you if you’re a director of your own company and pay yourself through a mix of salary and dividends, but you may be able to get support using the Job Retention Scheme. Please refer to our previous email update on this with the email subject named ‘Coronavirus Job Retention Scheme’. Limited Company Directors and Shareholders do not qualify for SEISS unless they have other qualifying self-employed income.

Please see an outline of the guidance that the Government have released to date on how this will work; we have tried to set out what we know and answer as many of your questions as possible.

What is it?

This financial assistance is designed to help if you’re self-employed or a partner of a partnership and have lost income due to coronavirus.

This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.

Who can apply?

You can apply if you’re a self-employed individual or a member of a partnership and you:

• have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, and
• traded in the tax year 2019-20, and
• are trading when you apply, or would be except for COVID-19, and
• intend to continue to trade in the tax year 2020-21, and
• have lost trading/partnership trading profits due to COVID-19

In order to be eligible, your average self-employed trading profits must also be less than £50,000 and more than half of your income arises from self-employment. This is determined by at least one of the following conditions being true:

• having trading profits/partnership trading profits in 2018-19 of less than £50,000 and these profits constitute more than half of your total taxable income; or
• having average trading profits in 2016-17, 2017-18, and 2018-19 of less than £50,000 and these profits constitute more than half of your average taxable income in the same period

HMRC will use data on 2018-19 returns already submitted to identify those eligible and will risk assess any late returns filed before the updated 23 April 2020 deadline in the usual way.

I didn’t complete a tax return in 2018-19 / I have only just started out as self-employed – what do I do?

If you have not submitted your Income Tax Self-Assessment tax return for the tax year 2018-19, the government have reopened the window to file a tax return. You must do this by 23 April 2020.

The Chancellor has stated in his announcement that the only way he could implement this support was to do it through historic HMRC tax returns. If you are only recently self-employed then unfortunately you will not be eligible for this income support.

Please see below for a summary of the other ways the government are providing support for the self-employed.

How much you’ll get

You’ll get a taxable grant which will be 80% of the average profits from the tax years (where applicable):

• 2016 to 2017
• 2017 to 2018
• 2018 to 2019

If you started trading between 2016-19, HMRC will only use those years for which you filed a Self-Assessment tax return.

It will be up to a maximum of £2,500 per month for 3 months. HMRC will pay the grant directly into your bank account, in one instalment.

Is the grant taxable?

The Chancellor stated that the grant is taxable.

How to apply

You cannot apply for this scheme yet.

HMRC will contact you if you are eligible for the scheme and invite you to apply online. Once you are invited, we can help you to prepare your claim.

Individuals do not need to contact HMRC now and doing so will only delay the urgent work being undertaken to introduce the scheme.

The Chancellor has said that the aim for payments to be made is June. However this will be backdated to March 1 so could potentially be a sum of £7,500.

You will access this scheme only through GOV.UK. If someone texts, calls or emails claiming to be from HMRC, saying that you can claim financial help or are owed a tax refund, and asks you to click on a link or to give information such as your name, credit card or bank details, it is a scam.

After you’ve applied

Once HMRC has received your claim and you are eligible for the grant, they will contact you to tell you how much you will get and the payment details.

If you claim tax credits you’ll need to include the grant in your claim as income.

I’m struggling for cash flow at the moment – what other options are there available for?

Until the above scheme is in place and the money is backdated, please see a summary of the other ways the government are providing support for the self-employed:

• Universal credit
  • the treasury had made universal credit more generous and that a family could receive as much as £1,800 a month in support.
  • A faster payment could be paid within days of an application.
  • You apply for universal credit online at www.universal-credit.service.gov.uk/postcode-checker.
  • You’ll need a form of identification, as well as your bank details, an email address, information about your housing and income, as well as details about savings and investments, plus how much you pay for childcare.
• Deferral of July self-assessment payment on account
  • If you’re due to pay a self-assessment payment on account by 31 July 2020 but the impact of the coronavirus causes you difficulty in making payment by that date, then you may defer payment until January 2021.
  • This is an automatic offer with no applications required. No penalties or interest for late payment will be charged if you defer payment until 31 January 2021.
  • During the deferral period you can set up a budget payment plan to help you pay the deferred payment on account when it comes due.
  • The deferment is optional. If you are able to pay / want to continue to pay your second payment on account on 31 July then you can continue to do this as normal
• Support for businesses through deferring VAT payments
  • If you’re a UK VAT registered business and have a VAT payment due between 20 March 2020 and 30 June 2020, you have the option to defer the payment until 2020/21.
  • If you pay your VAT liability by direct debit, please note that any liabilities may still come out automatically, therefore to preserve cash you should temporarily cancelling your direct debit.
  • This is an automatic offer with no applications required.
  • Any VAT refunds due will still be processed in the usual way
• Grants for business that pay little or no business rates
  • Please see our earlier emails for further details.
• Business interruption Loan Scheme
  • Please see our earlier emails for further details.

We have been working with a number of you already with particular regard to this scheme and although there is still a number of unanswered questions, we thought it would be useful to provide a bit more detail on it.

This update will provide further information on how the part time return will need to be managed and how claims can be made.

For employees that remain on full furlough leave for the month of July, there will be no changes to the process and claim that has been in place for the past few months. Please note that from 1 August, employers will no longer be able to reclaim Employers NI and pension contributions.

Many of our clients have contacted us regarding some further, more specific detail of the scheme and how it will work in practice, therefore please read below if this is applicable. Otherwise, our previous, more simplified email sent on the 10^th provides a more simple overview of the scheme.

Who can be furloughed and for how long?From the 1 July you will only be able to claim for employees that have been included in a JRS grant previously, meaning they must have been furloughed for a minimum of 3 consecutive weeks by 30 June.

From the 1 July it will no longer be required for employees to be placed on furlough for a minimum of 3 weeks, meaning you can agree with employees to be on full or flexible furlough for any period of time. Note, this is only for furlough commencing after 1 July. If a furlough agreement commenced for example, 20 June, this would need to continue for the full 3 week period, even though the end date is after 1 July.

There is no limit to the number of times an employee is placed on flexible furlough.

The number of employees you can claim for in any period starting from 1 July cannot exceed the maximum number of employees you claimed for under any claim ending 30 June, unless this is due to an employee returning from statutory parental leave.

Employers can return some employees to work on a part time basis whilst continuing to have other employees on full furlough.

If you decide to flexibly furlough any employees, you will need to produce a new written agreement that confirms the new furlough arrangement and copies should be kept for 5 years. Records of how many hours your employee works and the number of hours furloughed should be kept for 6 years.

It remains that for the days your employees are on furlough, they cannot be asked to do any work for you.

Changes to the claim period

Claims for periods starting before 1 July must end on or before 30 June. This is the case even where an employee furloughed in June continues to be furloughed full time in July. Separate claims will need to be submitted to cover the days in June and the days in July.

Claim periods starting on or after 1 July must start and end in the same month and must last at least 7 days unless claiming for the first few days or the last few days of the month.

Where a pay period covers the end of June and start of July, two separate claims will be required. For example the weekly pay period for 27 June to 3 July.

• The period 27 to 30 June will need to be claimed on its own or combined with the previous week.
• The 1 to 3 July can be a claim on its own or combined with the following week.

How much grant will we receive?Employers will have to pay the employees in full for the hours they work and 80% for the hours they are furloughed, up to the maximum cap.

Employers can continue to claim for 80% of wages, up to the cap of £2,500, for the hours the employee is on furlough, as well as Employers NI and pension contributions for the hours the employee is on furlough. From 1 August you will not be able to claim for the Employers NI and pension contributions.

The maximum furlough cap of £2,500 is proportional to the hours an employee is furloughed. For example, an employee is entitled to 60% of the £2,500 cap if they are placed on furlough for 60% of their usual hours.

For employees that have been flexibly furloughed, in order to calculate how much JRS grant will be received, it will be necessary to calculate the employees ‘usual hours’ and from this subtract the number of hours actually worked in the claim period to give you the number of furloughed hours which will be claimed for.

The ‘Usual hours’ are calculated as follows:

• For employees that are not contracted to a fixed number of hours or their pay depends on the number of hours worked. Usual hours will be based on the higher of either:
  • The average number of hours worked in the tax year 2019/2020
  • The corresponding calendar period in the tax year 2019/2020
  • When calculating hours, include any hours of paid leave and any hours of ‘overtime’ but only where the pay for those overtime hours was not discretionary.

• For employees who are contracted for a fixed number of hours they work. Usual hours will be calculated as follows:
  • Start with the hours your employee was contracted for at the end of the last pay period ending on or before 19 March 2020.
  • Divide by the number of calendar days in the repeating work pattern, including non-working days.
  • Multiply by the number of calendar day in the pay period you are claiming for.
  • Round up to the next whole number.

The maximum cap will need to be calculated based on the number of furlough hours and usual hours, where applicable.

Claims by Murrells

We have successfully assisted many of our clients with JRS claims including the claim periods from March to the end of June. The flexible furlough scheme is part of the new measures when the scheme was extended to the end of October.

This is evidently a much more involved process to calculate the amount of usual hours and furlough hours to then be used in the calculation with average rates of pay from the previous tax year, compared to the previous full furlough claim. We will continue to prepare and submit these claims on your behalf under the same agreement as with the first claims. Please continue to keep in contact and update the payroll team (This will likely be either Racheal or Jan who currently prepare your pay roll) with the hours / days worked each month and we will update your payroll records and the JRS claim at the same time.

If you are currently preparing the calculations in addition to filing the return yourself and would like assistance, please do get in touch with us and we would be happy to provide you with a quote.

Guidance on the scheme has previously been sent by email and many of you have contacted us since to clarify around the specifics of your business. Please note that for those still unaware, Directors CAN be furloughed as long as they are not continuing to work. They are still permitted to keep up with their statutory duties in accordance with the Companies Act (Filing accounts etc).

How to make a claim?

An online portal will be introduced by 20^thApril 2020 to allow the grants to be claimed.

If we prepare your payroll and hold agent authorisation to act on your behalf, HMRC have confirmed that we will be able to access the portal and claim the grant as your agent. Any clients who we do the payroll for but have been unable to obtain agent authorisation (filing only service) will be contacted separately.

Information Request

Due to the vast number of claims we will be processing for our clients, can we please ask that all those wishing to make a claim fill out our form which can be obtained from the office via email. Most of this will be information that we hold however if you can collate this for us it will allow us to complete all claims as quickly as possible. One line per employee containing Name, NI number, the date they stopped working and their average weekly gross pay. For those employees who are salaried monthly please multiply up the monthly salary by 12 and divide by 52 to give the weekly equivalent. If you are also able to provide the same average for Employers national insurance and Employers pension contributions where applicable this will further speed up the claim. You’ll find this information on any payslips or payroll reports sent across by Racheal or Jan. If you cannot figure it out, leave it blank.

**In addition to the template, we also need your business bank account details as the claim will be paid direct to you from HMRC**

Returned templates will be the first to be processed before we begin to work through the remainder even if it is just one single director being furloughed.

It is important that if further employees are furloughed after this submission to us you must update us as it happens, similarly when employees are taken off furlough please notify us as soon as possible. If HMRC require multiple submissions, we will continue to submit on the basis provided until notified otherwise. That way we don’t have to continually be verifying information. The responsibility is on you the client to keep us up to date with changes.

Apologies to those clients who have already provided some or all of this information but if you can provide it again in this format it will ensure there are no omissions.

We will do our best to keep you up to date by email with any further developments.

The Government have now released detailed guidance on how this will work so we have tried to set out what we know and answer as many of your questions as possible.

What is it?

This financial assistance is designed to help employers retain employees for an extended period of time, despite offering no work, and avoid lay-offs. It is called the Job Retention Scheme.

The Scheme involves employers placing their employees on ‘furlough’. This isn’t a term we use in UK employment law, and it seems to originate in the USA. It essentially means putting employees on a temporary leave of absence where they do no work and receive no pay, but they are retained on the company’s books to be brought back in when needed.

What do I have to do now?

The next step is to work out which employees can be furloughed and to agree this with each employee.

The guidance states that the ability to furlough an employee depends on their contract. It is not likely that employment contracts will include a specific right to use furlough.

However, contracts that contain a right to lay off employees on no pay already give employers the right to send employees home and not pay them for a temporary period and so can likely be used to furlough employees. The difference is that employees on lay-off will get, subject to service criteria, statutory guarantee pay (SGP) whereas furloughed employees will get 80% of their wages.

If contracts do not contain a right to unpaid layoff, employers can ask the employee to agree to furlough. Although 80% of wages may not be an initially attractive option next to full pay, it is likely to be more attractive than redundancy which may be the end result if alternative options cannot be found. It may also be useful for employees who are struggling to find childcare.

To be eligible for the subsidy, when on furlough, an employee can not undertake work for or on behalf of the organisation. This includes providing services or generating revenue. While on furlough, the employee’s wage will be subject to usual income tax and other deductions.

If an employee is working, but on reduced hours, or for reduced pay, they will not be eligible for this scheme and you will have to continue paying the employee through your payroll and pay their salary subject to the terms of the employment contract you agreed.

Which employees can I furlough?

Theoretically, any employee can be furloughed, however, they need to be on a company’s PAYE prior to 1^st March 2020 in order for that company to be able to claim the grant for their wages.

Employees hired after 28 February 2020 cannot be furloughed or claimed for in accordance with this scheme.

The employees can be on any type of contract, including:

• full-time employees
• part-time employees
• employees on agency contracts
• employees on flexible or zero-hour contracts

The scheme also covers employees who were made redundant since 28 February 2020, if they are rehired by their employer.

Which employers can access it?

The government has confirmed that all employers can access it; there is no restriction on size or type. The guidance outlines that employers will need to designate which of their workforce will be furloughed employees and then submit that information to HMRC, along with each employee’s earnings. Following this, they will receive the grant to cover the 80% wages.

The PAYE payroll scheme must have been in operation on or before 28 Feb 2020 and have a UK bank account.

How much can I claim back?

Employers who do this will be able to obtain a grant from the Government to cover 80% of furloughed employees’ usual wage costs, to a maximum of £2,500 per employee per month.

Employers can also claim back the associated Employer’s national insurance and minimum auto enrolment contributions.

How do I calculate “usual wage costs” for salaried employees?

For full time and part time salaried employees, the employee’s actual salary before tax, as of 28 February should be used to calculate the 80%. Fees, commission and bonuses should not be included.

What if the employee’s pay varies month to month?

If the employee has been employed (or engaged by an employment business) for a full twelve months prior to the claim, you can claim for the higher of either:

• the same month’s earning from the previous year
• average monthly earnings from the 2019-20 tax year

If the employee has been employed for less than a year, you can claim for an average of their monthly earnings since they started work.

If the employee only started in February 2020, use a pro-rata for their earnings so far to claim.

What about National Living Wage / Minimum Wage?

Individuals are only entitled to the National Living Wage (NLW)/National Minimum Wage (NMW) for the hours they are working.

Therefore, furloughed workers, who are not working, must be paid the lower of 80% of their salary, or £2,500 even if, based on their usual working hours, this would be below NLW/NMW.

Do I have to top-up the 80% out of my own pocket?

Although the employer can make up the remaining 20%, they do not need to. We strongly advise taking legal / HR advice before making any changes to employee’s contracts but in essence, the employer can make an offer to the employee to reduce their wages to 80% to match the expected grant receipt.

At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month.

This means that although there will likely be a time delay between paying the wages and receiving the grant, overall the business will break even on any employee’s designated as furloughed.

How do I claim the grant?

More information is awaited from the government on the online portal to be used to submit the information and any other details that may be needed. Chancellor Rishi Sunak has stated that he hopes the first grants will be paid by the end of April 2020 and that they will be backdated to 1 March 2020.

The scheme is initially intended to run for three months but may be extended.

You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until the 1 March if applicable.

So I can backdate it to 1 March?

Not necessarily! We see this is being potentially problematic and expect that you’d need to demonstrate you had already made, or intended to make, employee’s redundant before the date this measure was announced.

It is likely that the 1 March date is in there for employer’s who have already taken the decision to lay off staff or make them redundant.

So when can they be furloughed from?

Employees should document their agreement to any changes of their employment contract and can be furloughed from the date of this agreement. HMRC will be looking to ensure they did not carry out any work from this date.

What if an employee has more than one job?

If your employee has more than one employer they can be furloughed for each job. Each job is separate, and the cap applies to each employer individually.

What if an employee volunteer’s or undertakes training?

A furloughed employee can take part in volunteer work or training, as long as it does not provide services to or generate revenue for, or on behalf of your organisation.

Tax Treatment of the Coronavirus Job Retention Grant

Payments received by a business under the scheme are made to offset these deductible revenue costs. They must therefore be included as income in the business’s calculation of its taxable profits for Income Tax and Corporation Tax purposes, in accordance with normal principles.

Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.

We have been working with a number of you already with particular regard to this scheme and although there is still a number of unanswered questions, we thought it would be useful to provide a bit more detail on it.