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post july 1

Further Detail Behind Latest Government Announcement

Most of you will have already seen the headlines last week but we wanted to digest this and get a little more detail behind the proposals before we expanded on them and we still await some further details as of today.

In summary though:

  • Incentives to retain staff following the end of furlough
  • Temporary reduction, until 31st March 2021, in stamp duty so that houses under £500k are exempt
  • The Eat Out To Help Out Scheme across August for participating restaurants
  • Temporary VAT reduction
  • Incentives to help young people into the workforce through apprenticeships and traineeships (more information still to follow regarding this so contact us if you wish to discuss further)
  • The COVID-19 Job Retention Scheme or as most of us know it… Furloughing
    The Government is now incentivising companies to bring back their furloughed staff and keep them until at least Jan 2021. For every furloughed member of staff, you bring back to work, continuously employ and pay over an average of £520 a month for Nov/Dec/Jan, the government will give your business £1,000.The money will be granted once you have submitted your payroll RTI submission for January 2021. This could be a very welcome cash bonus for many businesses though in our opinion could have been better spent as we personally aren’t sure jobs would be kept open this long given the size of the grant.  A thankless task; we know and the Government have done a great job but we think this one will not hit the mark.More information is expected regarding this by 31 July and full guidance is going to be published in the Autumn we’re told.

    Stamp duty change
    An increase in the Stamp Duty Land Tax (SDLT) threshold in England and Northern Ireland – increasing the threshold under which no SDLT is paid on the purchase of a main home from £125,000 to £500,000, with immediate effect until 31‌‌‌ ‌March 2021.

    The Eat Out To Help Out Scheme across August for participating restaurants
    during August, diners can get 50% off Monday to Wednesday on meals and non-alcoholic drinks, up to £10 per person, when eating at participating restaurants, bars, cafes and other establishments that have registered

    VAT changes for eat in/takeaway food, hospitality and leisure (just not alcohol)
    Of course, we wholeheartedly applaud the reduction in VAT to 5% for these categories from July 15th to 12th Jan 2021. The accountant in us would have preferred the reduction to take place at the beginning or end of a month, but that’s just life!

    The UK government will cut VAT from 20% to 5% on any eat-in or hot takeaway food and drinks from restaurants, cafes and pubs, excluding alcohol. This VAT reduction also applies to all holiday accommodation in hotels, B&Bs, campsites and caravan sites, as well as attractions like cinemas, theme parks and zoos.

Flexible Furlough Calculations

As you are all aware, we have submitted all furlough claims to date for no charge.

Following the introduction of ‘flexible furlough’ and the complexity of the calculations behind this, there will now be a charge for the calculation element of this if you wish to take advantage because of the additional time involved at our end.

If you wish to make these calculations personally, you too would then need to then make the claim as we professionally cannot make a claim for which we were not responsible for.

All other standard furlough claims will continue to be made for no additional charge.

Free Xero training

Xero are kindly hosting a series of free training sessions to a limited number of people so if this of interest then please get in touch as the topics are changing on a week to week basis.

Webinar

What to expect next (financially and operationally)
This week we are speaking at the North East Expo event which this year is naturally being hosted online so to register for this free event just follow this link here where I will discuss my thoughts and make this as interactive as possible for those attending to help people plot a route forward both financially and operationally.

Last; but by no means least, welcome three new additions

I’ve resisted any pictures but we now welcome Kate, Triveni and Fraser to the team who actually started at various times through lockdown but that is the end of our latest recruitment drive; for now, so we thought it a good time to introduce them and if you see an e-mail in your mailbox from them it is genuine.

resources 15.06

What is a flexible furlough? How do I put employees on flexible furlough?

Yes we had another late Friday night update and a client with much greater HR expertise than us has kindly shared the following with us with regards to a number of questions that might be raised.

What is a flexible furlough?

From 1 July 2020, employers can bring furloughed employees back to work for any amount of time and any work pattern.

You will still be able to claim the furlough grant for the hours your flexibly furloughed employees do not work, compared to the hours they would normally have worked in that period.

How do I put employees on flexible furlough?

From 1 July 2020, only employees that you have successfully claimed a previous grant for will be eligible for more grants under the scheme.

This means they must have previously been furloughed for at least 3 consecutive weeks taking place any time between 1 March and 30 June 2020. For the minimum 3 consecutive week period to be completed by 30 June, the last day an employee could have started furlough for the first time was 10 June.

You should have a discussion with employees who you wish to place on the flexible furlough scheme because you will need to agree the arrangements of their part time work. The agreement should be confirmed in writing and you must keep a written record of the agreement for five years.

You do not need to place all your employees on furlough. In addition, you can continue to fully furlough employees if you wish.

How long can flexible furlough last?

Flexible furlough agreements can last any amount of time. This means that they do not need to last for a minimum of 3 weeks. However, the period that you claim for must be for a minimum period of 7 calendar days. Any flexible furlough period of less than this cannot be claimed for via the scheme.

Employees can enter into a flexible furlough agreement more than once.

What do I pay an employee on flexible furlough?

You will pay the employee for the hours they work, along with national insurance contributions and pension contributions for those hours.

The scheme will allow you to recover the remainder of wages to a maximum cap. Wage caps are 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.

The amount that the scheme will cover will begin to decrease from September 2020, and you will be responsible for all of the national insurance and pension contributions from August 2020, regardless of the employee being on flexible furlough.

Claims under the new scheme will be open from 1 July 2020.

When claiming for employees who are flexibly furloughed you should not claim until you are sure of the exact number of hours they will have worked during the claim period. This means that you should claim when you have certainty about the number of hours your employees are working during the claim period. If you claim in advance and your employee works for more hours than you have told HMRC about, then you will have to pay some of the grant back to HMRC.

What records do I need to keep?

You’ll need to keep records of how many hours your employees work and the number of hours they are furloughed during flexible furlough. For example, you will need to record that an employee who normally works for 37 hours a week is actually working for 15 hours and is furloughed for 22 hours.

Can my employees work for me during ‘down time’ in flexible furlough?

During flexible furlough, employees are not allowed to do any work for you or any linked or associated organisation during the periods that you record them as being on furlough.

Employees on flexible furlough can do training during the hours that they are recorded as being on furlough, but must be paid at least national minimum wage for those hours.

How do I calculate normal working hours?

If your employee is flexibly furloughed, you’ll need to work out your employee’s usual hours and record the actual hours they work as well as their furloughed hours for each claim period.

There are two different calculations you can use to work out your employee’s usual hours, depending on whether they work fixed or variable hours.

You should work out work out usual hours for employees who work variable hours, if either:

  • your employee is not contracted to a fixed number of hours
  • your employee’s pay depends on the number of hours they work

Where the employee’s working hours are fixed, or their pay does not vary with the amount of hours worked, the reference period for calculating their hours is the hours your employee was contracted for at the end of the last pay period ending on or before 19 March 2020.

Where an employee works variable hours, you will use the higher of:

  • the average number of hours worked in the tax year 2019 to 2020
  • the corresponding calendar period in the tax year 2019 to 2020.

 

Webinars (NOT TO BE MISSED)

One of the first and most important lessons that I have learnt is the time lost with family whilst I was working on the business and this is where Joe Laws of Joe Laws Photography will be joining us to discuss what he has planned to help people always appreciate this.  Already I have scheduled in our family photoshoot and these are memories that whilst might have in the past have been forgotten, but in the future, will always be remembered.

Family versus work versus you
Book here to join us at 11.30 on Thursday 18 June.

In our second webinar, planned for two weeks’ time on Thursday 25 June, I will be discussed what I think lies ahead and what we can potentially anticipate.

What to expect next
To join click here on Thursday 25 June at 11am where I will discuss my thoughts and make this as interactive as possible for those attending to help people plot a route forward.

Don’t forget that you can register for webinars previously missed by clicking on the links on past newsletters to access a recording, going to our website, or visiting our company YouTube channel.

resources 12.06

Support for your business. Returning to work. Mortgages.

We practice what we preach and have got ourselves well and truly prepared for the real storm that awaits as we face up to the challenges that lie ahead and are in a position to support you as needed.

We do now have three new members of the team that I’m sure you will all hear from in due course but also wanted to highlight some of the other changes that we are implementing over the coming weeks and months off the back of what we have learnt from lockdown and where we will be investing further in terms of time and resources:

  • We will; within our newsletters, be making our content more operational as well as financial based to assist you with the new challenges you are likely to face.
  • We will be issuing not just one newsletter per month, but as many as we see fit depending on announcements made to keep you as well-informed and up to date as possible.
  • Appreciating that not everybody will love the reading our newsletters and some would prefer something more interactive, we are currently considering the idea of fortnightly ‘huddles’ where we will have a dedicated hour for clients to join us and ask us whatever questions they wish.
  • We will maintain the idea of running webinars and are currently looking to run maybe one a month that will either be ran by us or an external expert from outside our field.
  • We will continue to update our resources page on our website; which can be found here for those that have not yet visited this, so if you miss anything you can go back and take a look at a time convenient to you.
  • Yes we have not started blogging as well to share our personal views and experiences as well so these too can be found on our resources page with one of favourites being the increasing importance of data.
  • We are in the process of fully rebuilding our website to again make this of more value and ‘future-proof’ for us and clients going forward.
  • We are also having some full customer-relationship software built to further tailor the content and support provided to you as clients and potential clients.
  • We are introducing new service offerings that we have already been providing during lockdown that we consider will be needed more than ever with one of these being the role of helping be your bank manager.  In the current climate, not everybody has a dedicated bank manager, but for those that do; including us, it has been invaluable and we will help breach this gap so we can support you when it comes to accessing finance.
  • In addition to our dedicated resources page, we have built out dedicated communication channels for specific support that include the following:
    • xero@gtaccountants.com – if you have any training needs or suggestions about content that you would like then please use this e-mail address.  Specific queries about your data within Xero should continue to be fed back directly to your client manager for a quicker and more tailored response.
    • funding@gtaccountants.com – should have any funding needs or questions then feel free to send them here and these can be picked up by our dedicated funding team.
    • enquiries@gtaccountants.com – we would ask that should you have any general comments, suggestions or even just improvements you would like for us to consider implementing, please feel free to share them here as we want to keep moving forward and improving so that we can do the same with our clients.

What I want to leave you with; at the bottom of this section, is that I remain cautiously optimistic about the future.  We must acknowledge that we are all at a crossroad or junction in our business journeys, and those that are looking optimistically ahead have taken similar actions to those above but tailored to their own businesses.

Have you done enough to prepare for what lies ahead?

Returning to work

One of our clients has kindly shared some recent work that they have been working on that might be of use for those returning to their usual place of work soon.

Feel free to contact Paul directly.

Mortgages

As the financial landscape right before us changes so rapidly, we have been chatting with mortgage brokers about what this means for those about to renew their mortgage this year and we are all in agreement that if this applies to you, then chat to your mortgage/financial advisor as soon as possible just to make sure you are prepared.

Blog - up

Words Are Good. Actions Are Better. Results Are Best.

Accountability has never more important than now, so why are we not seeing more people stepping up and showing real leadership?

Doing so could be the deciding factor in whether your business survives, and even thrives.

The press does its best to question the lack of accountability with leaders across the world. Closer to home, we’re seeing business leaders who are unwilling or unable to step forward in the current climate.

Why?

Distraction

Thanks to modern-day technology, we’re a click away from it. Whether that’s your phone, your laptop, or the TV or whatever, this on a day to day basis means it’s easy to lose focus and fail to achieve what you set out to do.

We need to stay focused and keep the end goal in sight.

What do you want to achieve? How will you do it? When will you do it by?

Let’s focus on three key areas:

  1. Time
  2. Information
  3. Money

Time

We want everything done yesterday.

The younger generation gets, possibly, unfairly tarred with this brush, but we’re all guilty of it. Can you say you’ve never paid extra for next day delivery with Amazon instead of going down the high street?

From a business perspective, everyone wants success. And they want it now. Right now.

And should we expect anything else? There are so-called business gurus out there who lead us to believe we can make a million pounds in a day. Yes, a day.

The volume of ‘how-to’, cheat guides and inspirational LinkedIn posts mean we expect more, quicker and easier whilst paying less for it.

Information

The amount of information you have at your fingertips can be overwhelming. And most of the time, you don’t have to go seeking it. It interrupts your day, with most of it being unhelpful and irrelevant.

Last week (yes, last week) I received a COVID-19 support email from a technology company I’d never heard of – several weeks after the pandemic has started. Talk about a waste of time.

How many support emails have you received? How much of this information can you read, process, and act on while staying on task with the important jobs you’ve got to do?

You need the right information at the right time. It’s critical to your success. So make sure you have measures in place to manage it correctly.

Money

How much money have you saved during this lockdown?

Despite the obvious financial strain the pandemic is putting on your business, you must’ve noticed you’re spending less than usual; ignoring food and alcohol costs perhaps.

This shows the amount of money we’re used to wasting. Look at that! There is food in the fridge after all, and you do have something to wear.

Like success, people want more money, easier and quicker. But money alone can’t fix problems caused by information overload and lack of time. You can’t buy either.

The Key To Solving All Three

You!

Many business owners are sitting on their hands waiting for it all the blow over. They think in a few weeks everything will be back to normal.

It won’t.

Other people read and regurgitate information to make it look like they’re doing the right things, without actually implementing anything they’re learning. They think that’s enough.

It isn’t.

Other business owners are keeping their sights firmly ahead. They’re leading by example. They’ve made a plan, communicated it clearly with their staff and fellow business leaders, and are doing what they promise. They trust that be doing this, they’ll see real results that will drive their business forward.

They are correct.

So, ask yourself which of these three people you are? If you don’t like the answer, it’s not too late, but time is running out.

You need to act now. You need the right information at the right time, which is something your accountant should be able to do for you.

The accountant you need in your corner right now is one that gives you the relevant and timely information you need to form a plan, communicate this to your staff, and do what needs to be done to survive and thrive COVID-19.

Get in touch today to find out how we can work with you to implement the action steps you need to get the results you want.

resources 02.06

Government Support Update

Rather than rush to get this out to you on Friday evening, we’ve taken a closer look at this and the detail then followed so can now summarise the latest announcements below.

Furlough changes
From 1 July 2020, businesses will be given the flexibility to bring furloughed employees back part time. This is a month earlier than previously announced to help support people back to work.

Individual firms will decide the hours and shift patterns their employees will work on their return, so that they can decide on the best approach for them – and will be responsible for paying their wages while in work.

The scheme updates mean that the following will apply for the period people are furloughed:

  • June and July: The government will pay 80% of wages up to a cap of £2,500 as well as employer National Insurance (ER NICS) and pension contributions. Employers are not required to pay anything.
  • August: The government will pay 80% of wages up to a cap of £2,500. Employers will pay ER NICs and pension contributions – for the average claim, this represents 5% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • September: The government will pay 70% of wages up to a cap of £2,187.50. Employers will pay ER NICs and pension contributions and 10% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 14% of the gross employment costs the employer would have incurred had the employee not been furloughed.
  • October: The government will pay 60% of wages up to a cap of £1,875. Employers will pay ER NICs and pension contributions and 20% of wages to make up 80% total up to a cap of £2,500. For the average claim, this represents 23% of the gross employment costs the employer would have incurred had the employee not been furloughed.

Self-employment income support scheme extension
Rishi Sunak announced last week that the Self-Employment Income Support Scheme will be extended – with those eligible able to claim a second and final grant capped at £6,570.
Those eligible under the Self-Employment Income Support Scheme (SEISS), which has so far seen 2.3 million claims worth £6.8 billion will be able to claim a second and final grant in August. The grant will be worth 70% of their average monthly trading profits, paid out in a single instalment covering three months’ worth of profits, and capped at £6,570 in total.

New Funding/further updates

Local authority grants:

It now appears that local authorities are gradually starting to drip feed out the discretionary grants that we mentioned on previous newsletters though they appear to each be operating at different speeds.  If you feel like you fell between the cracks then contact your local authority today for an update or keep an eye on their website.

There is also other financial support still out there that is not all directly related to COVID-19 with us including just a handful below:

General support for start-ups and those businesses looking to grow:

https://nbsl.org.uk/
https://www.rtcnorth.co.uk/

A great resource for finding grants generally:
https://www.grantfinder.co.uk/

Blog- Stricke back 1

Your Business Curve versus The Health Curve

According to the press, we are now past the peak of COVID-19. We’ve flattened the curve! Give it a few more weeks and it’ll be business as usual, right?

Wrong.

Nobody knows what the new ‘normal’ will look like. Because of this, your ability as a business owner to pivot and adapt has never been more important.

We’re at a crucial point in the timeline of the health of UK residents and their businesses. As the health curve shows evidence of decline; day by day, we’re at risk of getting complacent and this curve is very different to the one that businesses are following and the impact they have felt and are yet to feel.

Stay inside. Save lives. Protect the NHS.

Health is the most important thing in life. It’s more important than business. You know that.

That’s why you’re listening to the government’s instructions. You’re a responsible adult with morals. It’s the ‘right thing to do’.

But it’s easy to follow instructions, so what do you do if you’re the one giving them? As a business owner, you need to take control and put measures in place to flatten another type of curve: your business’ health curve.

What do I mean by your business’ curve? Like the national health statistics, we can measure the negative effect the pandemic has on your business and map it on a graph. Although the peak in a curve is usually considered to be a good thing, we know in this case it’s the opposite.

You can forgive yourself for being momentarily shell-shocked. A bit caught in the headlights if you will. It’s unprecedented times, after all. But I’m telling you that as we enter another week of lockdown, the time for hesitation and bemusement is over.

Now is the time to act. If you haven’t started to rebuild, you’re prolonging the inevitable.

If you don’t suck it up, make a plan, and get on with saving your business now then you might not have a business to go back to.

I don’t want to be a doomsayer. I’m a realist and am writing this to give you the shake you might need.

Your Business’ Health Curve

Just like in the health curve, we can’t get ahead of ourselves.

What would happen now if we lifted restrictions and everything returned to normal? That’s right, the declining curve would make a sharp u-turn and start climbing again.

Our business health curve hasn’t hit its peak yet. Why? This is due to various reasons including the help the government has given us business owners, financial reserves bailing people out but overall we must recognise this assistance will soon run out.

As we enter May, this ‘peak’ is likely to become increasingly noticeable.

When the government lifts lockdown, the new ‘normal’ will be very different from what we considered everyday life beforehand.

And because of this, the true extent of this pandemic on the business world is scarily unknown but what we can say is the peaks of the ‘business curve’ may be slightly flatter but are most definitely going to be longer lasting and potentially more sporadic.

So, What Can You Do?

You focus on what you do know and what you can control.

This is a once-in-a-lifetime opportunity to ask yourself the following:

  1. Using everything you’ve learned, if you could start your business again, how would it look?
  2. Are the problems you’re facing 100% down to COVID-19, or are they deeper rooted than that?
  3. How will you prepare for the very real threat of waves 2 and 3 of COVID-19?

Last time we had no warning. It came out of nowhere and turned our lives upside down. You might even say we buried our head in the sands about it, refusing to accept we’d be as affected as China and Italy.

But now we’re in this situation, if you could tip your business upside down, give it a good shake and put it back together again, how would it look?

The ‘new’ business world will be very different than the old, so the more you take action right now and pivot your business, the more agile your business will be and so the more prepared you’ll be for the future.

The ‘New Norm’ Myth Debunked

Don’t let yourself get carried away with messages out there in the press.

No, everybody is not going to suddenly start working from home; and no, all meetings will not now be virtual rather than face-to-face.

Things will change, but not to that extreme.

What this pandemic has done is highlight many inefficiencies within our businesses that we should’ve spotted before now. For example, why were you travelling for 2 hours to a catch-up meeting when you could do it online? Why have staff members taken days off when their kids are sick instead of working from home for the day? Could all those meetings have been an email?

The opportunity this pandemic has given us is time. And while we can’t be certain about when the business curve will hit its peak, we have the time now to prepare the best we can for it so strike back against COVID-19.

Revisit your processes. Streamline your services. Strip everything back and start again.

Now is not the time for doing nothing

If you’re feeling deflated, or you’ve been enjoying some time off expecting this to all blow over and make back the time and money lost on the other side, this has only delayed your peak and may even worryingly lengthen how long your peak lasts.

Face it head on

By acting now, you’ll see the peak and, like the UK’s health curve, you’ll get past it. You’ll flatten it and you’ll have a better chance of beating it and come out of this stronger than before. Plus, you’ll be in a better position to avoid peaks 2 and 3 if they do indeed come.

Unsure about how to get started? Get in touch today and let us help you model your business curve and get you ahead while you still can.

loan 2 may

Government Loan And New Grant Announcement

So the bounce back loans are now live and can be accessed via most banks websites as we have been tracking them this morning.

I know we covered most of this last week but the key known facts that we are aware of so far:

  • They cover borrowing from £2,000 to £50,000 with some banks adding that the amount borrowed must not exceed 25% of turnover as well as a guideline.
  • The Government guarantees 100% of the loan and there will be no repayments within the first 12 months.
  • You cannot claim if you are already claiming under the Coronavirus Business Interruption Loan Scheme (CBILS).  If you have already received a loan of up to £50,000 through the CBILS you can transfer this to the Bounce Back Loan scheme but this must be arranged with your lender by not later than 4 November 2020.
  • After the first year, interest is fixed at 2.5%.
  • There are no early repayment fees.

We’re told that the application process should be relatively quick and simple but naturally nobody has been through this and we would initially recommend you contact your bank if this is of interest then liaise with us if you require any assistance.

New premises grant

This one almost slipped under the radar but we spotted it and there is a new discretionary fund that has been made available to local authorities that is aimed at small businesses with on-going fixed property-related costs.

Now there is no mention of working from home costs so as yet we are not aware of any additional allowance for this but there are HMRC allowances for businesses and employees working from home and more information regarding this can be found here.

In terms of this new grant, local authorities are being asked to prioritise businesses in share spaces, regular market traders etc and more guidance can be found here.

To qualify, businesses must be deemed to be small as in have less than 50 employees and be able to demonstrate a significant drop in income due to COVID-19.

There are three levels of grants:

  1. Grants of £10,000
  2. Grants of up to £25,000
  3. Grants of less than £10,000 which will be at the discretion of local authorities

Further guidance for local authorities is set to be forthcoming so contact them directly if you have any further queries.

What is planned for May?

Whilst we must get back on track ourselves as firm in May, our ‘Strike-Back’ strategy continues and we have an exciting line-up of speakers planned for clients that will further help you reinforce and re-engineer your business so that you come back with a bang as you are most likely sick of us by now!

We have our first four speakers lined up so will announce more information later this week.

resources - Covid Guide April

Small Business COVID-19 Help Guide

Now more than ever, as a small business owner you need to know the key numbers to focus on and how to make them better. Understanding the key metrics in your business means you can form a plan that you can work towards in the short term, that will get you through to the long term.

Read more about  Small Business COVID Help

april 1

Import update on HMRC direct debits

We thought we should send an update out, given how quiet things have been over the past few days.

In short, the detail behind the Government announcements is where there is change hence there has been very few updates and thus our newsletters may become more sporadic again over the coming weeks.  Don’t worry though, if anything new comes to light for us to urgently share we will continue to do so.

One important update though; can you please cancel any direct debits to HMRC in respect of your VAT or self-assessment if you plan to take advantage of the ‘deferring payment’ otherwise money will still be taken automatically. 

As we continue to focus more on the detail and roll out of everything introduced by the Government, we are asking everybody take advantage of any extra time they have on their hands to ask themselves the following:

  • If you could start your business from scratch today; knowing what you have learnt and with the resources that you have accumulated, how would you structure it differently?  What will you do differently going forward?
  • Given the troubled times we are now facing; if you had known in advance that they were coming, what would you have done differently to prepare?

Now that we can start to focus on what changes need to be made, finance accessed etc. we can focus on how we bounce back positively on the other side of this so you will notice a change in direction in terms of being more upbeat again as we take on you the next step of making the best of a horrible situation.

A friend or contact in need

Never has it been more important to stick together in such times and no more than ever we are here for you to support you however we can.

Can we kindly ask that you listen out across social media, in your circle of friends and contacts, for anybody who too would benefit from the same support that you too are receiving.

Even if they just registered for our newsletter; which they can do by just clicking onto our website here, or if they were to take advantage of our newly introduced and dedicated COVID-19 (click here) and Cash Flow SOS page (click here), you would be helping them out.

Together, we can get through this.

Further help on it’s way

Whilst we have provided you all with a deluge of updates and information we acknowledge that we can do more.

Naturally we are stretched significantly as it is so would like to get this help out to as many of you at the same time as possible but appreciate that a newsletter may not always be the best method.

In light of this, we propose to run a series of live webinars; that will be not be more than say 30 minutes in length; allowing for a 15-20 minute update from us and 10 minutes for questions.

The most popular areas that we are being asked about and that we would look to run a live webinar on include:

  • assistance for those that are self-employed
  • furloughing staff
  • access to finance including government grants
If any of these are of interest, please e-mail us at enquiries@gtaccountants.com and we will set up a group live webinar subject to demand.
summary covid19

COVID-19 Summary (28 March 2020)

Wow, it has been quite a week and I appreciate that we have been sending quite a few newsletters with updates so we thought we would summarise where things are here.  In addition, we have provided more detail below this regarding furloughed employees and finally provided an update regarding accessing the government grants.
The Chancellor has set out a package of temporary, timely and targeted measures to support public services, people and businesses through this period of disruption caused by COVID-19.

This includes a package of measures to support businesses including:

  • a Coronavirus Job Retention Scheme
  • deferring VAT and Income Tax payments
  • a Self-employment Income Support Scheme
  • a Statutory Sick Pay relief package for small and medium sized businesses (SMEs)
  • a 12-month business rates holiday for all retail, hospitality, leisure and nursery businesses in England
  • small business grant funding of £10,000 for all business in receipt of small business rate relief or rural rate relief
  • grant funding of £25,000 for retail, hospitality and leisure businesses with property with a rateable value between £15,000 and £51,000
  • the Coronavirus Business Interruption Loan Scheme offering loans of up to £5 million for SMEs through the British Business Bank
  • a new lending facility from the Bank of England to help support liquidity among larger firms, helping them bridge coronavirus disruption to their cash flows through loans
  • the HMRC Time To Pay Scheme

More detailed guidance around each of the areas above can be found here

Furloughing Employees Update from HMRC

What is it?

It is a grant for employers to help fund employee wages, where certain conditions are met, that has temporarily been put in place for 3 months initially, but this may be extended.

Note that this is a grant and not a loan, so it will not be repayable.

Which Businesses can claim?

  • It is open to all UK employers who have created and started a PAYE payroll scheme on 28th February 2020
  • Any UK organisation can claim it is not based on profits but business must have a UK bank account
  • Special rules apply to those public sector employers, who are funded primarily from public grant funding, mainly as they are expected to still be delivering a public service.  Please do seek further guidance around this area though if you think it might impact you.

Which employees are eligible?

  • To claim for an employee that you decide to furlough, they must have been on your payroll as at 28 February 2020 and this is includes various types of contract such as full time, part time etc.
  • We understand the furloughing of employees can be done on an individual basis, however, you need to be aware of employment law, particularly around discrimination.
  • The scheme also covers employees who were made redundant after 28 February 2020, as long as they are rehired by their employer.
  • Employees on unpaid leave cannot be furloughed, unless they were placed on unpaid leave after 28 February.
  • Employees on sick leave or self-isolating should get Statutory Sick Pay, but can be furloughed after this, whilst employees who are shielding in line with public health guidance can be placed on furlough.
  • If the employee is on maternity leave and receiving maternity pay, SMP or maternity allowance, this will continue.  However, if you top the statutory payment up this can be claimed back through the furlough scheme as long as both parties agree; this also applies to other statutory payments such as Statutory Adoption Pay

Employee salaries and entitlements

  • During the furlough period the employee’s wages will still be subject to the normal income tax and national insurance deductions etc
  • If your employee reduces their hours, then they are still deemed to be  working for you, so the scheme will not apply.
  • 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 based on current guidance.
  • 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.
  • Employees that have been furloughed have the same employment rights as they did previously.
  • The government has also announced changes to carrying over annual leave, allowing workers up to 2 years to take unused holiday, for more info click here.

Making a claim

  • Employees will have had to have been furloughed before any claim can be made.
  • The reclaim amount which will be repaid into employers’ bank accounts by BACS, that is likely to be in arrears, can be up to 80% of an employee’s regular wage plus on-costs up to a maximum amount of £2,500.  Therefore a maximum amount that can be claimed is £2,500 salary plus on-costs for employer’s National Insurance and the required minimum pension contributions.  Employers will need to pay 80% of normal, regular salary without bonuses, commission etc. included or £2,500 whichever is lower. We are awaiting further guidance from HMRC on the calculation of the NI and pension contributions on the subsidised wages paid, so expect further updates on this one.
  • There are a couple of calculation methods for those on variable pay, either the same month’s earnings in the previous year, or average monthly earnings for the year (pro rata for less than a year)
  • As a worker will have been furloughed National Minimum Wage and National Living Wage will not be relevant unless training is being undertaken whilst furloughed
  • Once the scheme has been closed by the government, HMRC will continue to process remaining claims before terminating the scheme
  • Payments received by a business under the scheme are made to offset these deductible revenue costs and thus will be taxed as income.
  • Businesses can deduct employment costs as normal when calculating taxable profits for Income Tax and Corporation Tax purposes.
  • There are a number of data items that HMRC will require when making a claim via their portal.  It isn’t yet clear what the portal might look like, or the format required for the data.

If you would like to share guidance with your employees to help them understand this legislation, please ask them to visit: https://www.gov.uk/guidance/check-if-you-could-be-covered-by-the-coronavirus-job-retention-scheme

 

Some further queries you might have

 

Do employers have to backdate the 80% March payment values in April payroll/tax year 2020/21 or does it all have to be completed on the March payroll tax year 2019/20?

Currently, our understanding is that furloughing applies from the date that you notify your employees that they are being furloughed, not the date that you make the payments. Our suggestion would be to notify your employees now that you intend to furlough, with the amount that you intend to pay. Naturally guidance around this might change and we always recommend you take professional HR advice around this.

If a worker is furloughed, can they be brought back into work early if say work commitments change? 

Yes, we believe you can bring back your employees early but again take HR advice around how this is worded to enable the option to be considered at some point during the period of being furloughed.

For owner/Directors who are on the payroll, will they be treated as employees or self-employed?

Legally, directors of a limited company are employees and should be treated as such.  Like employees, any claim will be based in the same way BUT WILL NOT take account of any dividends.

If it is a single director company, are they eligible for this scheme?

Based on the latest ICAEW interpretation of the HMRC guidance; as HMRC are silent on this matter, they too are eligible and can make a claim provided they meet the same eligibility criteria that other employees need to meet.

Will you guys help us out as a business when this scheme is launched fully?

Of course we will and just watch out for further guidance coming but we will coordinate this all as part of the payroll process.

For those clients that handle payroll themselves internally, we will also help you through the same process if you wish so you’re not alone.

Any further questions that you might have which are are not covered above; and any action taken regardless, we always suggest is taken with the sign off of a qualified HR person with the above to act as a guide as to what can be interpreted from what HMRC has issued.  Use this accordingly to plan ahead, we will keep things right with regards to the declaration and reclaiming of amounts from HMRC then; you alongside an HR expert, can ensure the paperwork and implementation side of things can be handled correctly.

Don’t forget, as clients of ours, you have access to unindemnified advice from the HR team at Avensure or you can contact ACAS whose details are here.

As local authorities start to develop varying strategies around issuing the grant funding being provided by the Government, we suggest all businesses who feel that they meet the eligibility requirements contact their local councils through their websites to lodge a claim.

Grant Update

The links for Newcastle, North Tyneside, South Tyneside and Northumberland Council Councils can be found below:

Newcastle City Council click here
North Tyneside Council click here
South Tyneside Council click here
Northumberland County Council click here

The process seems quite straightforward and we have already lodged our claim but any queries around this please direct these towards your local authority.