Hi This update is about the Furlough Scheme and also some more 'fleshing out' of the Self-Employed Income Support Scheme (SEISS). If neither of those apply to you, we won't take offence if you leave it here and crack on with your weekend... or book a call if you'd like to talk about something else. Updates to Scope of Furlough Scheme Yesterday we heard about three changes announced to the Furlough Scheme: Extension to 30th June Following the 3-week lockdown extension, the grant scheme will now run until 30th June (previously 31st May). This is good news; even if shops reopen in May, normality will not return immediately, and this means you can gradually unfurlough [is that even a word?] staff in June as required. Holiday Pay Clarification Remember that furloughed staff will continue to accrue holiday entitlement whilst on furlough which will, of course, be a 'real' cost to you when they return to work. It has now been confirmed here that if employees take holiday whilst furloughed, this WILL be covered under the grant scheme, subject to the normal criteria. You WILL have to pay their usual (full) pay for the holiday but govt will still reimburse 80%. This means holiday leave costs you just 20% of what it would do after the scheme finishes. I suggest that wherever possible, ask furloughed staff to be pragmatic and agree to take their holiday NOW if possible. Bear in mind we've already had two Easter bank holidays and there's another two coming up in May; assuming staff would normally not work those days, you'd be entitled to treat these as holiday days BUT would need to pay them in full for those days. If they aren't taken as holiday then of course staff will have the right to take those when they return. New starters in March MIGHT be eligible Previously, only staff on the payroll at 28th February qualified for furlough support. Staff who started in March were effectively excluded. With much fanfare yesterday, this has now been extended to employees who were on the payroll up to 19th March. HOWEVER the Devil is in the detail, and sadly most new starters won't qualify for this. The guidance is clear that this applies only to staff who were paid (and the RTI submitted to HMRC) before 19th March. For weekly or fortnightly paid staff, this is all well and good. But if someone started mid-March and their first pay was, say, 25th March, they would not qualify. Sorry. Furlough Scheme Grant Application Portal HMRC still maintain the portal would be live from this Monday 20th April. However, I've been advised [off the record] they do not expect the system to handle every employer in the UK making a claim on Monday. In other words, the system WILL crash. (If it doesn't, I will eat my words and owe you a beer). Worse than that, to quote HMRC, The application needs to be done in one session. There is currently no save and return option. Sessions will time out after 30 minutes. 🙈 To make things as smooth as possible for you, we recommend you do ALL of the following before starting your application: 1) Make sure you are registered for PAYE online, through the Govt Gateway. It's still not clear if you need to be registered where your agent is processing the claim, but it costs nothing to register so we recommend you check this NOW. 2) Full name and NINO of each furloughed employee 3) Details of the start date of each employee's furlough period 4) The pay period you are claiming for 5) Your PAYE scheme reference numbers, plus your own UTR or Company Number 6) The total amount being claimed for each employee; split down to salary, Employer NIC and Employer pension contributions. Once the application is made, you should expect to wait for at least SIX working days for the cash to hit your bank account. Asking Blue Penguin to Make the Application As before, we are offering to make the applications for clients (and non-clients), although we will be charging a token amount for this, equal to the cost of running your regular monthly payroll. You'll appreciate we have received high demand for support and will be treating everyone very much on a first-come, first-served basis. If you haven't already confirmed by email that you'd like us to process this for you, please do so now and we will add you to the list. I expect our time cost to be in the £'00s per client, and you'll appreciate there's a limit to the amount of work even we can do for free. Hence, we are very happy for you to go ahead and attempt the claim yourself, and then just refer to us if you lose the will to live with the HMRC portal... A Reminder of the Scheme Conditions The gov.uk guidance is clear that If you cannot maintain your current workforce because your operations have been severely affected by Coronavirus, you can furlough employees and apply for a grant... This grant will be a lifeline to many businesses. HMRC's default stance is "pay now, ask questions later", which is entirely pragmatic. However, they also say: Payments may be withheld or may need to be repaid in full to HMRC if the claim is based on dishonest or inaccurate information or found to be fraudulent. Dishonest or deliberately fraudulent claims put our essential public services and the protection of livelihoods at risk during these challenging times I've heard examples of people furloughing staff and then asking them to "volunteer" their services back to the company. I've also been asked if directors can furlough themselves and then work for their company on a self-employed basis. In both of these cases, I suspect HMRC will be ripping them a new one once this all settles down. And quite right too! 👮♂️ Self-Employed Income Support Scheme (SEISS)
No changes to this scheme per se (although we expect an extension in line with the Furlough Scheme above), but I have created some worked examples which I hope are useful. But to remind you the main features of the scheme: - Pays a grant worth 80% of your monthly profits, for 3 months - Based on your taxable profits in 16/17, 17/18 or 18/19 (or less if you started trading more recently) - Payments capped at £2,500 per month - Only available to those with profits under £50,000pa - More than 50% of your income to have come from self-employment - Holiday Accommodation currently excluded - but you may be eligible for other grants, please call me. - We await details on exactly how the scheme will operate, although we expect it to be similar to the Furlough Scheme, i.e. a claim to be made personally, or by your agent, through the Government Gateway. Example 1: Average Trading Profits If your total (cumulative) taxable profits for the tax years 16/17, 17/18 and 18/19 was £60,000, this is worked out as: 1. £60,000 divided by 3 years = £20,000pa
2. Divide £20,000 by 12 months = £1,666
3. Calculate 80% of £1,666 = £1,333 You would be eligible for £1,333 per month for 3 months If you only traded in 17/18 and 18/19, use the total profits for those two years and divide by 2 instead of 3. Example 2: Losses If you made a loss in any of the last 3 years, these are deducted from your total (rather than treated as £nil, as would normally be the case). For example: Y1 profit £10,000
Y2 loss £5,000
Y3 profit £10,000 Total: £15,000. Average annual profits = £5,000pa or £416 per month. 80% of this is £333. You would be eligible for £1,333 per month for 3 months Example 3: Other Income Sources Where less than 50% of your income is from self-employment, you won't be eligible. However, this is averaged out, as shown below: | 
