The coronavirus is understandably a huge health concern for everyone, however it is also a time of tremendous pressure for small businesses and self-employed workers. We’ve just set up a WhatsApp group and have received and answered lots of questions - we thought it may be helpful to share some of these to help you navigate this unprecedented situation. Please read on, and if you have any additional questions don’t hesitate to contact us.
Obviously at the moment, the situation is changing rapidly so we’d advise you speak to your accountant or HR advisor to evaluate how it applies to your company and that you are getting the most up to date advice.
Question: The government has advised that they will be offering a grant covering 80% of our staff’s salaries. Will this cover staff members whose hours have been reduced?
Answer: Unfortunately, it doesn’t. The grant only covers people who are furloughed (basically made redundant) and they cannot work at all.
A suggestion would be furlough some of the team and keep the others working full time.
Question: Can I still rehire my staff after social distancing requirements have been lifted?
Answer: Furlough is currently capped at 3 months. As soon as work resumes you can take them back on.
Question: I am going to have to furlough one of my employees. How do I go about doing that? When does the government support start for this?
Answer: The provision will be backdated to the 1st March. At the moment, you just need to let the employee know about the furlough. The technical steps to claim haven’t been released yet. So far, in order to access the scheme, you will need to:
- Designate selected 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).
Question: Do I need to send furlough forms off to HMRC, or retain them at the moment?
Answer: Currently just retain them in the employees HR file.
Question: Are Directors entitled to furlough?
Answer: Yes, but only if they are not working as per the furlough requirements. They will be paid according to the PAYE amount, not dividends.
Question: Should we still be taking dividends if the money is still there?
Answer: If you have cash and profits available you can still take dividends as normal.
Question: When working out payroll projections for furloughed staff, should we be calculating 80% of the gross or net payment?
Answer: Work it out from the gross payment.
Questions: Can you tell us about pension and NI contributions for furloughed staff?
Answer: On furlough, employees still receive the same benefits as normal, so pensions still need to be paid. NI is also payable on furlough.
Question: I have a business that employs designated key workers. In the business hierarchy we also have apprentices who are not considered to be key workers. Will the government grant cover my apprentices’ salaries?
Answer: Yes, the grant applies to all those who are employed by your company. This is relevant to any employees who are made redundant due to their skill level.
Question: What counts as a key worker?
Answer: The most up to date information from the government regarding key workers can be found here.
Question: Can I still offer my services to key workers?
Answer: If your services are enabling key workers to continue as normal then we believe it is classified as essential. It is therefore ok to continue working in that capacity.
Question: What should I do about my VAT payments?
Answer: If you cannot make the payment or are concerned about cash flow, you should cancel your direct debit to make sure it doesn’t go out.
Question: What do we do about paying commercial rents at the moment?
Answer: Speak directly to your landlord if possible. There is no funding but there is protection from eviction for commercial tenants. 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.
Question: What is the provision for self-employed workers and are there any restrictions?
Answer: Self-employed people across the UK will be able to receive a taxable grant worth 80% of their average monthly profit over the last three years, up to a maximum of £2,500 per month.
To receive the grant, individuals must meet the following conditions.
- They must be genuinely self-employed, earning the majority of their income from self-employment. This will rule out gig economy workers with additional jobs.
- They must earn no more than £50,000 trading profit in 2018-19 or an average trading profit of less than £50,000 from 2016-17, 2017-18 and 2018-19. (This threshold is expected to cover 90% of self-employed people. Of the remaining 10%, half are claimed to have average income in excess of £200,000.)
- Recipients must be adversely affected by the coronavirus crisis – i.e. showing a loss of income.
- They must already be self-employed, having filed a 2018-19 tax return. This excludes those who recently turned to self-employment.
Question: What is the situation if you’ve been furloughed from one employer, but provide other services to another employer under a self-employed contract?
Answer: The guidance is a little unclear here, what we do know is that if you have two PAYE employers you can be put on furlough by one employer and continue to work for the other – providing you do not change working patterns, for example, if you work Mon-Weds for Employer A and then Thur-Fri for Employer B if you were furloughed by Employer A you couldn’t then work extra for employee B.
We also know to qualify for the self-employment grants, 50% of your income needs to come from self-employment.
So, I think the answer is a bit of both.
Question: What grants are available and how are they accessed?
Answer: This includes a package of measures to support businesses including:
- A Coronavirus Job Retention Scheme – this is the 80% grant to cover employees’ wages, HMRC are still working on this and should be available mid to late April
- a Self-employment Income Support Scheme – no application process wait until HMRC contact you cash to be available by June
- small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief – businesses will be contacted by local councils and advised if they qualify for the we expect this to happen in early April
- grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000 – as above
If you’d like more information or need to talk to us further about how we can help you identify opportunities and limit any impacts caused by Covid-19, get in touch with our team on 01322 555 442 or email firstname.lastname@example.org
Last updated: 27/03/2020, 15:00