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Latest Updates: Government Schemes to Assist You and Your Business.

By March 31, 2020 News

LATEST UPDATE: March 31st 2020

At Exchange Accountants we are striving to keep you up to date with all the latest information and guidelines as they are released.

Job Retention Scheme

All employers will be able to access this scheme to pay part or all of an employees’ salary. Selected employees will be classified a Furloughed workers meaning they will be kept on the payroll and the employer can apply for a grant to cover 80% of their wage up to a maximum of £2,500. The employer is under no obligation to pay the remaining 20% of the employees wage and it will be entirely their choice if they wish to do so.

Eligibility

All UK Businesses are eligible

Key Points

  • The employee must be furloughed and must not carry out any work, even on a reduced hours basis
  • Furloughed employees must have been on your PAYE payroll on 28 February 2020, and can be on any type of contract, including full time, part time, agency contracts and zero hour contracts employees
  • Employees hired after 28th February 2020 cannot be furloughed or claimed for in accordance with this scheme so anyone added to the payroll for March will not qualify
  • If an 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.
  • Employers will receive a grant from HMRC to cover the lower of 80% of an employee’s regular wage or £2,500 per month, plus (it was originally thought the £2,500 included this) the associated Employer National Insurance contributions and minimum automatic enrolment employer pension contributions on that subsidised wage.
  • At a minimum, employers must pay their employee the lower of 80% of their regular wage or £2,500 per month. An employer can also choose to top up an employee’s salary beyond this but is not obliged to under this scheme.
  • The claim will be made using an online portal which is currently being developed
  • You can only submit one claim at least every 3 weeks, which is the minimum length an employee can be furloughed for. Claims can be backdated until the 1 March if applicable.
  • Once HMRC have received your claim and you are eligible for the grant, they will pay it via BACS payment to a UK bank account and they will have the right to fully audit the claim made at a later date
  • To be eligible for the subsidy employers should write to their employee confirming that they have been furloughed and keep a record of this communication. (Sample letters are attached)
  • The grant will be treated as taxable income and therefore be liable to income or corporation tax.

How to access the Scheme

You will need:

  • Designate affected employees as ‘furloughed workers,’ and notify your employees of this change – changing the status of employees remains subject to existing employment law and, depending on the employment contract, may be subject to negotiation. We would urge that if you have an HR provider that you to liaise with them before making any decision to lay off or furlough staff.
  • Submit information to HMRC about the employees that have been furloughed and their earnings through a new online portal (HMRC will set out further details on the information required)
  • Eligible employees are those on the payroll on 1 March 2020. It has yet to be clarified whether or not those re-employed under a new contract will qualify, although the policy intent would seem to support this would be reasonable.

The only area that is not now clear is how to quantify and claim the Employers National Insurance and mandatory pension contributions with further guidance to be issued on this

Click here for full guidance

Please note: This will have an impact on your cash-flow as you as an employer will still have to pay the wages as normal and then reclaim the applicable cost back from HMRC. It has been indicated that the aim is to have the first reclaim paid within weeks before the end of April. However this may be slightly optimistic and be delayed into May in which case there will be a funding gap which will need financed from you cash-flow.

If we here at exchange accountants do your payroll we will process this information on your behalf, contact us by email at info@exchangeaccountants.com

Business Interruption Loan Scheme

This is a loan available to essentially cover cash-flow during the interruption period covered by the COVID 19 outbreak. You will need to apply through your own bank and have a viable borrowing proposal in place. The business proposal will have to demonstrate that after the COVID 19 outbreak is over you will have the  ability to repay the loan.

Having sought further clarity from the Banks on this which only really applies if you make an application to your bank for funding in the normal way and they turn you down or do not have sufficient security available. At this stage you will be eligible for the business interruption funding and the interest free periods associated. String trading businesses are therefore likely to be financed in the normal way by their banks and will not avail of the preferential terms. Please also remember that the banks will review any application in the normal way through their credit departments. From speaking to banks they foresee potential problems with valuation being required for property pledged as valuers will not be able to value properties due to the lock down restrictions. All that can be done is to get applications in as quickly as possible and see what arises.

The information below is an actual request for a client who intends to apply for a loan under this scheme and highlights the level of detail required

  • An initial 6 month cash-flow forecast outlining the impact of COVID-19. It’s very unclear at this stage but if you assume these measures will be in place for a minimum of 3 months, that should allow you to prepare a realistic forecast. I have attached a copy of a cash-flow forecast for those of you unfamiliar with how to prepare one and I’m here of you need any help with it;
  • A 12 month cash-flow forecast for the period after the initial 6 months has lapsed i.e. you need to prepare 2 forecasts covering an 18 month period from today;
  • Your last set of YE accounts;
  • Management Accounts up to 29/2/20 (if available) – please note that an internal Sage /Quickbooks /Xero report is considered acceptable;
  • Confirmation of whether you wish to apply for an overdraft or a loan and the term you wish to apply for. Please note that overdrafts & loans have a maximum term of 3 of 6 years respectively;
  • Detailed commentary as to the exact impact COVID-19 is having on your business – the more detail the better here.
  • Expected trading position post-COVID-19;
  • Owners contingency plans post-COVID-19;
  • A fully completed Personal Financial Profile (attached) for all Directors / owners – please take extra care to complete this form entirely as failure to do so will delay your request; and a
  • Declaration of any assets owned by the company. Please confirm estimated value of the assets and any loans secured by same.
Click here to find more details.

Grant Schemes

Further updates have been issued in relation to the 10k grants available to small businesses and the 25k grant available to the retail hospitality and leisure businesses.
The 10k grant will be paid automatically without the need for an application and will be based on last years rates value. If your bank details are held by the the rates office you will need to do nothing further. If you feel you should be eligible for this grant please go online to the portal and provide whatever details are required.
We can confirm the following on the £10k grant scheme
  • Whichever business occupied and traded from the building on 15th March 2020 is entitled to the grant
  • If you have not yet received your rate bill but you occupied the property on 15th March 2020, you will still be able to access the grant.
  • It doesn’t matter if you have rates arrears as the grant will still be paid anyway
  • If you pay rent and rates together to your landlord and the landlord then pay rates over, a separate form will become available to allow you to claim
  • Working from home does not qualify even if you do all your business from there.
  • There is no appeal process if you feel you qualify but haven’t received the grant

Please see the link below to complete if you believe that you may be entitled to the grant.

 

Applications are now open for the £10k small business grant. Click Here for details required and the online application form:

 

The 25k grant appears to be down the line unfortunately there is no more information to share on this however please note however that this only applies the rateable value of the property from which you operate is between £15,000-£51,000. Therefore if you are in the retail, hospitality and leisure sectors and operate from premises with a rateable value of less than £15,000 you will only get the £10,000 grant.
Please click here for more details of both grant schemes as well as other help available.

We hope you have found this information useful and if you have any query on any aspect of the matters raised please feel free to contact your point of contact within our business.

We hope you all keep safe time and healthy during this difficult and unprecedented time.