Small Business Government Aid: COVID-19 Update (May)

We hope you and your family are keeping well and safe. The SME Accounting team has been working very hard to ensure that all your queries are answered and you are provided with the support you need during these challenging times.

Please find below an update on financial support during the Coronavirus pandemic and FAQs on Coronavirus Job Retention Scheme (CJRS) and furlough.

** The government has announced that the scheme will be in place until October, however, companies will be asked to “start sharing” the cost of the scheme from August.? We are awaiting detailed guidance regarding this and will keep you updated in due course. **

Should you have any queries, please do not hesitate to get in touch.

Bounce back loans

The Bounce Back Loan Scheme (BBLS) enables smaller businesses to access finance quickly during the coronavirus outbreak.

The scheme helps small and medium-sized businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.

The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year.

Eligibility

You can apply for a loan if your business:

– is based in the UK

– was established before 1 March 2020

– has been adversely impacted by the coronavirus

If your business was classed as a business in difficulty on 31 December 2019 you’ll need to confirm that you’re complying with additional state aid restrictions.

How to apply

There are 11 lenders participating in the scheme including many of the main retail banks. You should approach your bank yourself via the website or online banking.

The lender will ask you to fill in a short online application form and self-declare that you are eligible.

The lender will decide whether to offer you a loan or another type of finance and you’ll be responsible for repaying 100% of the amount borrowed.

Please note that no personal guarantee is required for this loan and credit ratings will not impact your eligibility.

Self-employment Income Support Scheme (SEISS)

This scheme is aimed at self-employed individuals or a member of a partnership – please note that directors of a limited company are not classed as self-employed.

From 4th May HMRC started to get in touch with those self-employed individuals it believes are entitled to claim for a SEISS grant.

However, HMRC do not necessarily know whether the taxpayer meets the conditions of the scheme and an eligibility checker has been provided to help taxpayers to confirm whether they are eligible – please click this link if you have not received any correspondence from HMRC or to confirm your eligibility for the scheme.

Most of the information required for the scheme is included in your tax return but please get in touch if there is anything you are unsure of.

The SEISS application portal will open to taxpayers on a staged basis between 13th and 18th May, with the portal opening on different days for different taxpayers. Taxpayers login using their government gateway account (or select the option to create an account) to complete the application process. Claims have to made by the taxpayer themselves and cannot be made by agents. HMRC does all the calculations needed for the claim, using the information in the submitted tax returns. The taxpayer does not have to provide any figures.

HMRC will check the claim and expects to make payments from 25th May 2020 within six working days of the application being submitted.

CJRS & Furlough FAQs

If you cannot maintain your current workforce because your operations have been severely affected by coronavirus (COVID-19), you can furlough employees and apply for a Coronavirus Job Retention Scheme (CJRS) grant that covers 80% of their usual monthly wage costs, up to £2,500 a month, plus the associated Employer National Insurance contributions and pension contributions (up to the level of the minimum automatic enrolment employer pension contribution) on that subsidised furlough pay.

Q: Can I reclaim for wages if I have asked staff to take a pay cut or work fewer hours, but carry on working?

A: No – the Scheme is only for staff that are not working, however, the furloughed employees can undertake training whilst on furlough. Local colleges offer lots of free online courses and this may be a good time to upskill your workforce.

Q: My staff are only paid a national minimum wage. Do I have to pay them 100% of their wage to comply with this legislation?

A: Employees are only entitled to National Minimum or Living Wage if they are working. If the 80% will drop them below that threshold you can pay the lower rate if they are not working. If your employee undertakes any training on their furlough, they will have to be paid at least the NMW.

Q: I am a director. Can I be furloughed?

A: Yes, you can be furloughed if you are a PAYE director. You will not be able to do any work except where you are complying with your statutory duties.

Q: Can I rotate staff on furlough, for example, one week normal working, one week furlough?

A: Employees must be furloughed for a minimum of a three week period.

The government guidance confirms that employees can be furloughed multiple times and can be rotated. This means that if a piece of work comes in, an employee can be ‘unfurloughed’ for a week and then placed back on furlough as long as each furlough period lasts for a minimum period of three weeks. You must write to staff to let them know about their change in status and keep all correspondence for your records.

Q: Do I submit one claim for March to June 2020?

A: No, you can only claim for a period up to two weeks in advance – this means that if you were to submit your first claim today [12/05], you could only claim up to 25th May. In this scenario, we’d suggest you wait until next Monday to submit a claim that does not have to be time apportioned and enables you to claim to the end of May 2020. Another claim would then have to be submitted for June 2020.

Q: Can I submit more than one claim per pay period or amend it at a later date?

A: No, only one claim can be submitted per claim period which means that you can’t go back and amend your claim to include more employees once it has been submitted. This also means that if you run both weekly and monthly payroll, you have to claim for both in one claim.

If you have made a genuine mistake on your claim, you will have to phone HMRC to advise them of this, however, it is currently taking longer than usual to get through due to an increased number of calls.

We appreciate the challenging circumstances and if you have any queries, please do get in touch. We will keep you updated on any developments on the above in due course.

Take care and stay safe.