Business Support

Recent statistics published by HM Treasury confirm that £22bn of Bounce-Back Loans have been taken up by 700,000 small businesses across the UK. That is an average loan of approximately £31,000 per business.

As these loans are limited to 25% of business turnover, the average turnover of each business is £124,000.

The terms of these loans are generous. 2.5% fixed interest rate and no repayments due for 12 months. In the first year the Government is picking up the tab for interest and set-up charges and is providing a guarantee to the lenders.

However, these are loans and will need to be repaid out of future years’ earnings.

And they imply that there will be a bounce-back in activity. No doubt many sectors will bounce-back but there will be others more seriously affected and needing to cope with longer-term issues. For example, how long will it take the hospitality and travel industries to recover? Will we ever have the confidence to step on an aircraft again in the certain knowledge that our return will not be frustrated?

If you have taken out a loan presumably you did so after taking these considerations into account? If you did not, it is not too late to consider your planning options. Please call if you need help to do this. 

HMRC’s guidance on the Coronavirus Job Retention Scheme has been updated a number of times as the workings of the scheme evolve. The most recent update, on 29 May 2020, followed an announcement by the Chancellor, Rishi Sunak.

The Chancellor outlined further details on the extension of the scheme to 31 October 2020 and the introduction of flexible furloughing. As things stand the extension will be final and the scheme will be closed on 31 October 2020. Further guidance on the workings of the amended scheme is expected to be published on 12 June.

The government support for the scheme will continue but employer costs of the using the scheme will slowly increase from July.

We have summarised the main points below:

• In June and July, the government will continue to pay 80% of costs up to £2,500 cap.
• From 1 July, employers can bring back employees to work part-time, for any amount of time and any shift pattern. Any claim under CJRS will be limited to normal hours not worked. Employers will have to pay employees for the hours they work.
• From 1 August, government support for the scheme will begin to reduce. The government will continue to pay 80% of wages up to £2,500 cap, but employers will have to cover employers’ NIC and pension costs for the hours the employee does not work.
• From 1 September, government support will be lowered to 70% of wages up to a reduced £2,187.50 cap. Employers will pay employers’ NIC, pension costs plus 10% of wages to a total cap of £2,500 for furloughed workers time.
• From 1 October, government support will be lowered further to 60% of wages up to a reduced £1,875 cap. Employers will pay employers’ NIC, pension costs plus 20% of wages to a total cap of £2,500 for furloughed workers time.
• The cap will be proportional to hours not worked.
• The CJRS will be closed-down 31 October 2020.

The Chancellor has confirmed that the Self-Employment Income Support Scheme (SEISS) is to be extended for a final three-month period to 31 August 2020. The maximum grant for the final 3 months of the scheme will be based on 70% of eligible earnings (previous quarter 80%). This means that the SEISS will in total provide qualifying self-employed workers up to 6 months financial support from the government.

The following points list some of the most important eligibility criteria for the scheme:

• Applicants must be self-employed or a member of a trading partnership, voluntary work, or duties as an armed forces reservist.
• Carry on a trade which has been adversely affected by COVID-19,
• Have filed a tax return for 2018-19.
• Have traded in 2019-20; be currently trading at the point of application (or would be except for COVID-19) and intend to continue to trade in the tax year 2020-21,
• Have trading profits of less than £50,000 and more than half of total income from self-employment.
• Individuals can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.

Eligible applicants will have to wait until the last month of the claim period, August 2020, to make a claim. The maximum grant for the three-months will be £6,570 (Previous quarter £7,500) paid in a single instalment. It will be possible for a qualifying self-employed person to claim for the second grant even if they had not claimed for the first grant.

The government has started the slow process of reopening selected businesses as we continue to face restrictions in almost all aspects of daily life. The reopening of retail outlets reflects the acceptance that life for the foreseeable future will operate under what is being referred to as the ‘new normal’ complete with social distancing and other measures.

The timetable for the reopening of the retail economy in England started on 1 June 2020, with outdoor markets and car showrooms being allowed to open on condition that they meet the COVID-19 secure guidelines to protect shoppers and workers. There have also been changes to the definition of ‘essential’ retailers to include home-ware stores.

From 15 June 2020, all other non-essential retailers including shops selling clothes, shoes, toys, all furniture stores, books, and electronics, tailors, auction houses, photography studios, and indoor markets are expected to reopen. This is conditional on retailers meeting the necessary requirements including the five tests laid out by the Government for easing the lock-down.

Some businesses such as hairdressers, nail bars, beauty salons, pubs, clubs and restaurants will remain closed until at least July because the risk of transmission in these environments is still thought to be too high.

There are regional variations to these rules in Northern Ireland, Scotland and Wales.

The government has announced that a new code of practice is to be published for High Street businesses and their landlords to help provide clarity and reassurance over rent payments. A new working group has been setup with leading businesses and trade associations to develop the new code of practice.

The government has said that the new code will encourage fair and transparent discussions between landlords and tenants over rental payments during the Coronavirus pandemic and guidance on rent arrear payments and treatment of sub-letter and suppliers. This will enable collaboration and cooperation within the sector and help ensure no one part of the chain shoulders the full burden of payment. The new code will be temporary in nature and the government will be able to explore options to make it mandatory if necessary.

The new code will build on other measures for the sector already announced including a moratorium on commercial landlord evictions until at least the end of June. There are also measures temporarily banning the use of statutory demands and winding up petitions until 30 June 2020 and more breathing space for tenants by preventing landlords using Commercial Rent Arrears Recovery unless they are owed 90 days of unpaid rent.

The Coronavirus Job Retention Scheme (CJRS) is open to all UK employers to access support to continue paying part of their employees’ salary for those employees that would otherwise have been laid off during this crisis.

The CJRS will close to new entrants on 30 June 2020. From that date onwards, employers will only be able to furlough employees that had previously been furloughed for a full three-week period prior to 30 June.

The following HMRC guidance is useful for those involved in payroll processing:

• The final date employers can furlough staff for the first time is 10 June 2020. Employers will have until 31st July to make any claims in respect of the period to 30 June.
• From 1 July the scheme will only be available to employers that have previously used the scheme in respect of employees they have previously furloughed.
• From 1 July, claim periods will no longer be able to overlap months, employers who previously submitted claims with periods that overlapped calendar months will no longer be able to do this going forward. This is necessary to reflect the forthcoming changes to the scheme.
• The number of employees an employer can claim for in any claim period cannot exceed the maximum number they have claimed for under any previous claim period.
• Employers can continue to make claims in anticipation of an imminent payroll run, at the point payroll is run or after payroll has been run.
• Employers will be able to make their first claim under the new scheme from 1 July.
• This scheme will be closed down on 31 October 2020.

The Intellectual Property Office (IPO) is the official UK government body responsible for intellectual property (IP) rights including patents, designs, trademarks and copyright. The IPO buildings are currently closed but the majority of services remain unaffected.

A number of service changes were put in place on 27 March 2020. The service changes in relation to interrupted days was reviewed on 29 May 2020.

The IPO declared 24 March, and subsequent days until further notice, interrupted days. An 'interrupted day' is a day in which the normal course of business at the IPO is not possible.

This means that most deadlines for patents, supplementary protection certificates, trademarks and designs and applications for these rights, which fall on an interrupted day will be extended. To help rights holders, businesses and IP professionals plan ahead, the IPO will provide a minimum of 2 weeks’ notice before ending the interrupted days period.

On 29 May, the IPO decided to continue with the period of interruption and will review and update again on 22 June. There are also IPO service changes relating to renewals, postal and paper services, fax, Certified Office Copies (COCs) and payments and refunds.

The Coronavirus Statutory Sick Pay Rebate Scheme allows small and medium-sized businesses and employers to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The online service to reclaim SSP launched on 26 May 2020.

The scheme covers up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19. Employers are eligible for the scheme if their business is UK based, small or medium-sized and employed fewer than 250 employees as of 28 February 2020. Employers must also have had a PAYE payroll scheme that was created and started on or before 28 February 2020.

A claim can be made for employees that had / have Coronavirus, cannot work because they are self-isolating at home or are shielding in line with public health guidance. The remit of the scheme was widened with effect from 28 May 2020 to include employees who have been told to self-isolate under the new NHS ‘Test and Trace’ system as they have come into contact with someone with Coronavirus. The temporary legislation deems individuals who are self-isolating as incapable of work for the purposes of SSP.

Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of Coronavirus can get an isolation note from NHS 111 online and those who live with someone that has symptoms can get a note from the NHS website.

Self-Employed Income Support Scheme (SEISS)

No doubt due to recent lobbying by the press and other interested support groups, the Chancellor has extended the SEISS for a final three-month period to 31 August 2020.

This means that the self-employed who are eligible to claim will have received six-months financial support from government.

As before, applicants will have to wait until the last month of the claim period, August 2020, to make a claim.

A bullet-point summary of the changes is set out below:

• SEISS extended for three months to 31 August 2020
• Applications covering the June – August 2020 period will open in August.
• Grant available will be 70% of eligible earnings (previous quarter 80%).
• Maximum grant for the three-months will be £6,570 (previous quarter £7,500) paid in a single instalment.
• Eligibility criteria remains unchanged.
• A self-employed person can claim for the second grant, to August 2020, even if they had not claimed for the first grant.
• More information on these changes will be published 12 June 2020.

If you are eligible to make a claim for this second grant under the scheme you will still be subject to the same rules regarding eligibility. You will need to confirm that your business has been adversely affected by the Coronavirus outbreak.

If you did not claim for the first quarter, to May 2020, as your business at that time was not adversely affected, but will be affected in the quarter to 31 August 2020, it will be possible to claim for the second quarter.

And finally, claims for the first quarter (March-May 2020) will close 13 July 2020.

Coronavirus Job Retention Scheme (CJRS)

As previously announced, the CJRS has been extended to 31 October 2020 and will be changed to a flexible arrangement from 1 July 2020 to allow employees to resume part-time working.

The Chancellor and his advisers will be gritting their teeth as drawing a line in the sand by tapering and then closing the CJRS on 31 October 2020 will force the hand of employers to consider their options. It is likely that redundancies will start to climb from that date as will the number of the unemployed.

A bullet-point summary of the changes announced is set out below: 

• The CJRS will close to new entrants on 30 June 2020. The final date employers can furlough staff for the first time will be 10 June 2020.
• From 1 July 2020, employers can bring back employees to work part-time, for any amount of time and any shift pattern. Any claim under CJRS will be limited to normal hours not worked.
• June/July 2020 – Government will continue to pay 80% of costs up to the £2,500 cap.
• August 2020 – Government will pay 80% of wages up to £2,500 cap, but employers will have to cover employers’ NIC and pension costs for the hours the employee does not work.
• September 2020 – Government will pay 70% of wages up to a reduced £2,187.50 cap. Employers will pay employers’ NIC, pension costs and 10% of wages to a total cap of £2,500.
• October 2020 – Government will pay 60% of wages up to a reduced £1,875 cap. Employers will pay employers’ NIC, pension costs and 20% of wages to a total cap of £2,500.
• The cap will be proportional to hours not worked.
• The CJRS will be closed-down 31 October 2020.

The above changes to a flexible approach cloak a raft of detail that government is not publishing until 12 June 2020. Those responsible for making CJRS claims will need to wait for these further clarifications as they will explain how employers should calculate claims.

We will be integrating the changes into our payroll services when they are available and will contact clients if further details regarding part-time working are to be introduced.

Clearly, there are planning considerations. Please call if you have employees on furlough and you need to consider your options; for part-time working up to 31 October and longer-term considerations after this date.  
 

The Chancellor, Rishi Sunak has made a further Treasury Direction under sections 71 and 76 of the Coronavirus Act 2020 concerning the Coronavirus Job Retention Scheme (CJRS).

The CJRS currently helps employers furlough their employees with significant government support. Employers can currently claim cash grants of up to 80% for eligible furloughed wages to a maximum of £2,500 per month, plus the employer National Insurance contributions and minimum auto-enrolment employer pension contributions on that 80%.

The new Direction was published on 22 May 2020 (but the document is dated 20 May 2020) and makes a number of changes to the first Direction. Among the changes, the new Direction makes it clear that written agreement for an employee to cease all work has to be retained by the employer until at least 30 June 2025. The new Direction also provides further details on the training activities a furloughed employee can undertake and concerning the Transfer of Undertakings (Protection of Employment) Regulations 2006 (“TUPE”) transfer rules.

The new Treasury Direction continues to refer to the scheme as running until the end of June 2020 although the Chancellor has previously announced that the scheme will continue in its current form until the end of July. From 1 August until 31 October 2020, the scheme is expected to continue in a modified format. Further details on the changes are expected to be released shortly and it seems likely that further updated Treasury instructions will be published in due course.