Coronavirus COVID-19 Help and Support

Self Employed

Coronavirus COVID-19 help and support for the Self Employed that we have so far. The Self-employment Income Support Scheme (SEISS) will support self-employed individuals (including members of partnerships) who have lost income due to coronavirus (COVID-19).

This scheme will allow you to claim a taxable grant worth 80% of your trading profits up to a maximum of £2,500 per month for the next 3 months. This may be extended if needed.

You must have been trading as self-employed in 18/19 and 19/20 and intend to keep trading in 20/21. You must have submitted an 18/19 tax return but, if yours is outstanding, there is now an extension to 23 April by which date you must submit the return.

Your self-employed trading profits must also be less than £50,000 and more than half of your income must come from self-employment. HMRC will look at the average of your last three years of total trading profits up to and including 18/19 if you have been trading that long. If you’re a director of your own company and paid through PAYE you are not eligible for this grant but you may be able to get support using the Job Retention Scheme.

Making a Claim

You cannot apply yet and do not need to contact HMRC. HMRC will contact those who are eligible for the scheme. Claim a grant through the Self Employed Income Support Scheme . The Chancellor has said that the first payments should be made at the beginning of June. Self-employed people who have lost income because of COVID-19 and need immediate support should be able to access the following support in the mean time:

Deferring VAT and Self Assessment payments on account

Grants for businesses that pay little or no business rates

Increase amounts of Universal Credit

The Business Interruption Loan Scheme and further information here

The new HMRC dedicated Covid-19 helpline is 0800 024 1222- This line is open from 8am-4pm Monday to Friday.

Coronavirus COVID-19 Job Retention Scheme (CJRS)-what we know so far

What are the requirements for an employer to access the grant?

• Employers must have created and started a PAYE payroll scheme on or before 28 February and have a UK bank account to be able to access the grant.
• An employee must be furloughed for the employer to receive the grant.
• An employee who is furloughed, must be furloughed for a period of at least three weeks and for a maximum of three months (although the guidance suggests this may be extended) to qualify for the grant.
• There is no need to furlough all employees and employees can be furloughed on a case by case basis, depending on the employer’s needs.
• An employer can re-furlough an employee after they have returned to work from a previous period of furloughing.

Furloughing an employee means they must not undertake any duties of their employment. It is worth noting that as CJRS will be considered on an employment by employment basis. Someone having a second job or taking on a new job while furloughed does not impact the CJRS grant the employer receives for the employee.

Similarly an employee can take part in volunteer work or training, which does not provide services to or generate revenue for the employer who has furloughed them. It’s worth noting however that if the employee is undertaking training, this may be considered working time for minimum wage purposes, and employers will need to ensure that minimum wage is paid if the training is working time.

The guidance also expands on who can make a claim for the grant. It confirms that where a company is in administration, the administrator will be able to access the scheme.

Employees you can claim for.

The grant will only be available for employees included on payroll on 28 February. It will not therefore, cover new hirers taken on after this date.

The grant is available for both full time and part time employees, as well as directors and casual workers. This was previously announced by the Chancellor.

However, the concern for directors is that directors will often take a low or no salary from the business. Instead they will often utilise dividends to top up their income, as and when they have the profits to do so. As dividends are not subject to PAYE, the dividend amounts are unlikely to form part of the CJRS calculation for the director. Directors in this position are likely to find that should they qualify for a CJRS grant, the amount paid would likely be 80% of a low salary.

A further concern is that a director must be non-active to be furloughed. Given they will continue to need to manage the business in some way, they are unlikely to be completely in-active and therefore may fail the CJRS requirements.

Employees entitled to statutory pay, such as statutory sick pay and maternity pay, will continue to receive these payments and will not be able to be furloughed while in receipt of the statutory payments.

The guidance does however, confirm that employees who fall within the vulnerable category and are required to undertake shielding are able to be furloughed and access the scheme.

The scheme is open to public sector employees, but the Government view is that the majority of public sector workers are essential workers and unlikely to be furloughed. Even where the public sector role is non-essential, the suggestion is that it would be possible to re-deploy them to an essential role, rather than furlough the worker.

What Earnings will the grant be based on?

The grant will be based on regular earnings excluding any fees, commissions or bonuses. The grant will provide reimbursement for 80% of the earnings figure, subject to a total gross payment to the employee of a maximum of £2,500 per month.

The total maximum grant available to the employer will be higher than the £2,500, as it will also cover the employer national insurance and minimum auto-enrolled pension contributions due.

Employees will remain liable to PAYE, employee national insurance and any other usual payroll deductions (such as student loan repayments) on the furloughed payment made to them by their employer.  The employer may choose to pay more than the amount of the grant paid to them by the Government.

Zero hour contracts and employees with varying pay

The latest guidance details how those with irregular earnings CJRS grant entitlement will be calculated.

The calculation of the grant entitlement is split within three categories;

1. Employees with more than twelve months service
2. Employees with less than twelve months service
3. Employees who joined in February 2020

For the employees who have more than twelve months service, the grant is calculated as the higher of:

• The same month’s earning from the previous year
• Average monthly earnings for the 2019/20 year

For employees with less than twelve months service, the grant is calculated as an average of their monthly earnings since the start of their employment.

For employees who joined during February 2020, the grant can be based on a pro-rata of their earnings.

What do employers need to be able to make a claim and how will claims be made?

Employer can only make one claim every three weeks at most, which presumably will mean the claim is made on a PAYE scheme basis, rather than on an individual basis as each employee is furloughed.

Employers will make the claim in line with the actual payroll amounts, and will do so at the point at which the payroll is run or in advance of an imminent payroll.

HMRC intends for the Coronavirus Job Retention Scheme to run for at least three months from 1 March 2020. The portal should be operational soon. Meanwhile there is lots more information, including what records you’ll need, on gov.uk here.

Support for businesses through the Coronavirus Business Interruption Loan Scheme – CBILS

The temporary Coronavirus Business Interruption Loan Scheme will support SMEs with access to loans, overdrafts, invoice finance and asset finance of up to £5 million and for up to 6 years.

The government will also make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so smaller businesses will benefit from no upfront costs and lower initial repayments.

Key Features

• Up to £5m facility: The maximum value of a facility provided under the scheme will be £5m, available on repayment terms of up to six years. A number of the banks are limiting the amount that can be applied for to: 2 x annual wage bill or 25% of turnover.
• 80% guarantee: The scheme provides the lender with a government-backed, partial guarantee (80%) against the outstanding facility balance, subject to an overall cap per lender
• No guarantee fee for SMEs to access the scheme: No fee for smaller businesses. Lenders will pay a fee to access the scheme
• Interest and fees paid by Government for 12 months: The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, so most (*) smaller businesses will benefit from no upfront costs and lower initial repayments. However as the funds are those of the individual bank / alternative lender, the interest after the first 12 months and duration of any capital repayment holidays will vary between lenders
• Finance terms: Finance terms are up to six years for term loans and asset finance facilities. For overdrafts and invoice finance facilities, terms will be up to three years
• Security: Insufficient security is no longer a condition to access the scheme. No personal guarantees for facilities under £250,000. Personal guarantees may still be required, at a lender’s discretion, for facilities above £250,000, but they exclude the Principal Private Residence (PPR) and recoveries under these are capped at a maximum of 20% of the outstanding balance of the CBILS facility after the proceeds of business assets have been applied

Eligibility

You are eligible for the scheme if:

• your business is UK based, with turnover of no more than £45 million per year
• your business meets the other British Business Bank eligibility criteria

How to access the scheme

The scheme is now open for applications. All major banks are offering this scheme.

To apply, you should talk to your bank or one of the 40 accredited finance providers as soon as possible, to discuss your business plan. You can find out the latest on the best ways to contact them via their websites. Please note that branches may currently be shut down to enable social distancing.

If you have an existing loan with monthly repayments you may want to ask for a repayment holiday to help with cash flow.