Coronavirus: Crucial tax and employment advice for businesses

27 March 2020

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There is no doubt that the coronavirus is having a major impact on business and that many people, employers, employee’s, and the self- employed, are extremely concerned about the financial impact on their business and livelihoods.

The UK government have announced a number of measures over the last few days to try to lessen the impact on the workforce, the latest of which has just been announced this morning.

Coronavirus Job Retention Scheme:https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

Self-Employment Income Support Scheme: https://www.businesssupport.gov.uk/self-employment-income-support-scheme/

Unfortunately, as this is an unprecedented situation the schemes are not yet live and no legislation has been passed so all advice is caveated at this stage. However, we will continue to update you as new information comes to light, and provide you with our view of the likely practical consequences of the government measures being produced, and how you can implement them to best assist your business or organisation.

Coronavirus Job Retention Scheme

In short, the Coronavirus Job Retention Scheme will enable all employers with a PAYE scheme created and started on or before 28 February 2020, to access support to continue paying part of their employees’ salary for those that would otherwise have been laid off during this crisis. The scheme will apply to “furloughed” workers and will cover 80% of an employee’s usual wage costs, up to £2,500 a month.

“Furloughed“ workers is an entirely new concept in employment law, and it is vital that you take advice to ascertain if you have correctly categorized the appropriate parts of your workforce, and followed the correct procedures.

Once an employee has been “furloughed”, they will have to retain that status for three weeks and will not be able to do any work for the company or their eligibility may be altered with HMRC. They are able to carry out volunteering or training for other parts of the company but no paid work can be carried out.

To access the scheme, you will need to designate affected employees as “furloughed workers”, notify your employees of this change, and once the new online portal is live, submit information to HMRC about the furloughed employees with details of their earnings. It is believed that employer NI and pension contributions over the £2500 limit can also be reclaimed.

UPDATE (6 APRIL)

HM Revenue & Customs have today issued further guidance on the Coronavirus Job Retention Scheme, including:

  • more detailed information on scheme eligibility
  • further information on how to calculate a claim
  • clarification of what constitutes wages.

Further guidance for employers can be found here.

Advice for employees can be found here.

Please note that the online service you will use to claim is not available yet, but is expected to be available by the end of April 2020.

Self-Employment Income Support Scheme

Similarly, the Self-Employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) whose income has been negatively impacted by COVID-19. The scheme will provide a grant to self-employed individuals or partnerships, worth 80% of their profits up to a cap of £2,500 per month. This will be calculated using the average profits from tax returns in 2016-17, 2017-18 and 2018-19 to calculate the size of the grant, and the scheme will be open to those where the majority of their income comes from self-employment and who have profits of less than £50,000.

In addition, the government have announced several other measures, such as reimbursement of statutory sick pay, VAT deferment, and payment of self-employed tax that will further assist cash flow for companies in the coming months.

If you require further advice or assistance, our staff are working remotely and available to answer any questions you may have.

Contact us

If you require assistance in dealing with any of the new procedures being introduced, please get in touch with Jim McMahon on Jim.McMahon@balfour-manson.co.uk or 07850 772215.

If you require further employment law advice, contact Robert Holland on Robert.Holland@balfour-manson.co.uk or 07850 918761.

Comment

Tax Manager

Jim McMahon

Partner, Head of Employment

Robert Holland