Furloughing extended again
The Coronavirus Job Retention Scheme (CJRS) for furloughed workers has been extended until 30 September 2021. Currently, the worker must receive a minimum of 80% of ‘normal’ pay for their furloughed hours and this will continue through to September.
Until 30 June 2021, the position of the employer will be unchanged, namely:
- They can claim a CJRS grant to cover 80% of normal pay; but
- They must pay the employer National Insurance Contributions (NIC) plus minimum auto enrolment pension contributions on the salary actually paid to the worker, with no grant to cover these amounts.
From July, the cost of furloughing the worker will increase, as the grant will only cover 70% of normal pay, reducing to 60% for August and September.
An employee must not work for the company at all during the hours for which they are furloughed, but this can be as many or as few hours a week as are agreed between the worker and employer. An exception is a furloughed director, who is allowed to carry out any statutory work related to their directorship (e.g. preparation of accounts).
The eligibility for the scheme is being amended from 1 May 2021 to include employees who were employed on 2 March 2021, as long as a payment of earnings was reported through RTI between 31 October 2020 and 2 March 2021.
There are three possible reference dates for determining furlough pay, which depend on when the employee first had earnings reported on a Full Payment Statement (FPS) through Real-Time Information (RTI).
Grant claim deadlines will continue to be 14 days after the month-end although, as currently, most employers will want to make the claims in advance of payrolls being run.
There are to be two further grants available under the Self-employed Income Support Scheme (SEISS), both based on three months’ worth of previously reported profits.
The 4th grant (SEISS-4), covering February to April 2021, will be 80% of profits, up to a maximum of £7,500. HMRC will contact potentially eligible taxpayers in mid-April and applications will be open from late April until the end of May 2021.
The SEISS-5 grant covers May to September 2021 but is still based on three months of profits. Claims can be made from late July, but note that this grant will work differently to the others:
- If turnover has fallen by ≥ 30%, it will be 80% of profits, up to a maximum of £7,500
- If turnover has fallen by < 30%, it will be 30% of profits, up to a maximum of £2,850
Taxpayers who started a business in 2019/20 were not eligible for the first three grants but will be able to claim the 4th and 5th grants if they meet the revised qualifying conditions, including having filed a 2019/20 tax return by 2 March 2021. However, many people are still ineligible for these grants, including traders whose profits were previously over £50,000 and taxpayers who have less than 50% of total reported income from self employment.
Various points on the new SEISS grants still need to be clarified by HMRC but it has been confirmed that any grant received will be taxable in the tax year of receipt, irrespective of the business’s accounting period.
SEISS: new grant claimants
To try to combat fraud, HMRC has been writing to newly eligible taxpayers, asking them to complete pre-verification checks to confirm evidence of trade. The letters notify them that HMRC will phone them within 10 working days. On the call, HMRC will ask the taxpayer to confirm their email address and agree to receive a link to a secure Dropbox. They will then have two days to upload one form of identity and three months of bank statements to demonstrate their business activity, before the link expires.
HMRC has confirmed it will make three attempts to phone, so taxpayers who receive the letter should check that HMRC holds the correct telephone number for them. If the number needs to be updated, they must contact 0800 024 1222 (a line only to be used for updating telephone numbers). If HMRC is unsuccessful in reaching the taxpayer, it will write a further letter. Taxpayers who receive the letter but do not complete the checks cannot claim a grant.
Recovery loan scheme
In the Budget, the Chancellor announced a new ‘Recovery Loan Scheme’. This will provide lenders with a Government guarantee of 80% on eligible loans between £25,000 and £10 million
This scheme is now open to all businesses, including those who have already received support under the existing COVID-19 loan schemes.
Business rates relief and ‘re-start grants’
Eligible retail, hospitality, leisure and nursery properties in England enjoyed 100% business rates relief in 2020/21. This has been extended to 30 June 2021, after which there will be a further 66% relief for the period to 31 March 2022 (subject to conditions and limits).
Re-start grants have been announced, as follows:
- Non-essential retail businesses can claim up to £6,000 per premises
- Hospitality, accommodation, leisure, personal care and gym businesses can claim up to £18,000 per premises as they reopen after the present lockdown
The Government is also providing £425 million to local authorities to use for discretionary grants to businesses.
The devolved authorities have their own measures to provide similar support.
The Government is aware that there have been a significant number of fraudulent claims under the various support measures (e.g. employers claiming furlough grants for hours when employees are still working or traders claiming SEISS grants when their business has been unaffected by coronavirus). HMRC may soon be on to the culprits, as it has been allocated £100m for a ‘taxpayer protection taskforce’ of 1,265 HMRC staff to combat fraud within COVID-19 support packages. Early disclosure of such matters to HMRC can reduce significantly, or even eliminate, any penalties that might otherwise arise.
Are you up to date with the revised eligibility criteria for the various support schemes? Do you think you might need to disclose information to HMRC about a previous incorrect claim? We are here to help with these and any other matters, so that you can make the most of this Government support without running into unforeseen problems.