There is welcome news for the English hospitality sector and, if they can operate safely, they can reopen from the 4 July. There are important changes for the construction industry. The Coronavirus job retention scheme rules (CJRS) are changing, these are outlined below and other Government news. We are still awaiting specific details of what constitutes “Usual hours” for the CJRS scheme from 1 July and will keep you updated before claims are made.
Below is another reminder from HMRC to reinstate your direct debit if you cancelled it and that the scheme ends 30 June 2020.
CHANGES TO THE CORONAVIRUS JOB RETENTION SCHEME
The Coronavirus job retention scheme is changing form 1 July and the first time you will be able to make claims for days in July will be 1 July. 31 July is the last day that you can submit claims for periods ending on or before 30 June.
The Coronavirus Job Retention Scheme will close on 31 October 2020.
From 1 July, employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim CJRS grant for the hours not worked. From 1 August 2020, the level of grant will be reduced each month. To be eligible for the grant employers must pay furloughed employees 80% of their wages, up to a cap of £2,500 per month for the time they are being furloughed.
The timetable for changes to the scheme is set out below. 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:
- There are no changes to grant levels in June.
- For June and July, the government will pay 80% of wages up to a cap of £2,500 for the hours the employee is on furlough, as well as employer National Insurance Contributions (ER NICS) and pension contributions for the hours the employee is on furlough. Employers will have to pay employees for the hours they work.
- For August, the government will pay 80% of wages up to a cap of £2,500 for the hours an employee is on furlough and employers will pay ER NICs and pension contributions for the hours the employee is on furlough.
- For September, the government will pay 70% of wages up to a cap of £2,187.50 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed. 2
- For October, the government will pay 60% of wages up to a cap of £1,875 for the hours the employee is on furlough. Employers will pay ER NICs and pension contributions and top up employees’ wages to ensure they receive 80% of their wages up to a cap of £2,500, for time they are furloughed.
Employers will continue to able to choose to top up employee wages above the 80% total and £2,500 cap for the hours not worked at their own expense if they wish. Employers will have to pay their employees for the hours worked.
The table below shows Government contribution, required employer contribution and amount employee receives where the employee is furloughed 100% of the time. Wage caps are proportional to the house not worked.
It is important you discuss changes and agree in writing any new flexible working arrangements with your employees. We are able to provide example Board Minutes and letters confirming flexible working arrangements between the employer and employee.
Please talk to us if you have any queries.
HOW DIFFERENT CIRCUMSTANCES AFFECT THE SELF-EMPLOYMENT INCOME SUPPORT SCHEME
The Self-Employment Income Support Scheme currently allows you to claim a taxable grant worth 80% of your average monthly trading profits, paid out in a single instalment covering 3 months’ worth of profits, and capped at £7,500 in total.
If you are self-employed or member of a partnership find out how your circumstances can affect your eligibility for the scheme.
If you are eligible you must make your claim for the first grant on or before 13 July 2020.
This scheme is being extended.
Different circumstances may affect your eligibility.
How the grant works
If you receive the grant you can continue to work, start a new trade or take on other employment including voluntary work, or duties as an armed forces reservist.
The grant does not need to be repaid but will be subject to Income Tax and self-employed National Insurance.
HMRC will work out if you are eligible and how much grant you may get. But you can follow these steps to help you understand how we will do this and what you can do now.
To work out your eligibility HMRC will first look at your 2018 to 2019 Self-Assessment tax return. Your trading profits must be no more than £50,000 and at least equal to your non-trading income.
If you are not eligible based on the 2018 to 2019 Self-Assessment tax return, they will then look at the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019.
Grants under the Self-Employment Income Support Scheme are not counted as ‘access to public funds’, and you can claim the grant on all categories of work visa.
VAT DEFERRAL UPDATE
The deferral of VAT payments due to coronavirus comes to an end on 30 June and businesses need to take action to reinstate their direct debit mandates.
The VAT payment deferral means that all UK VAT-registered businesses have the option to defer VAT payments due between 20 March and 30 June 2020 until 31 March 2021.
However, please be aware that businesses need to take steps to reinstate their direct debit mandates so that they are in place in time for payments due in July 2020 onwards. Any outstanding returns should be filed, and three working days should be allowed to elapse before reinstating the direct debit mandate.
HMRC will issue guidance on the end of the VAT deferral period very soon but, to be effective, direct debit mandates usually need to be set up three working days before a VAT return is filed.
We cannot set up direct debit mandates on behalf of our clients; the business needs to set up the mandate through their business tax account.
HMRC has confirmed that it will not collect the outstanding balance of deferred VAT when the direct debit mandate is reinstated. HMRC has made the necessary systems change to avoid this happening for businesses in MTD for VAT.
CHANGES TO NOTIFYING AN OPTION TO TAX LAND AND BUILDINGS DURING CORONAVIRUS (COVID-19)
If you are notifying HMRC of a decision to opt to tax land and buildings, you are normally required to notify them within 30 days by either:
- printing and sending HMRC the notification, signed by an authorised person within the business
- emailing a scanned copy of the signed notification
Social distancing in response to coronavirus has made these rules challenging to follow. HMRC have temporarily changed the rules to help businesses and agents. HMRC have temporarily extended the time limit to 90 days from the date the decision to opt was made. This applies to decisions made between 15 February and 31 October 2020.
You can email notifications to firstname.lastname@example.org.