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AIMS Accountants – Information for Clients during Covid 19

Author: Naomi Cowan

Tags: Coronavirus, hmrc, small business

With “Lockdown2” now in play, new details of help and assistance for businesses aimed at mitigating the financial impact of COVID-19 are appearing every day. We wanted to outline some of the measures which have been put in place which might impact business owners. For further information, you can always contact your local AIMS accountant.

Please note that this is a rolling blog, which will be added to when we have further updates

Wednesday 25th November

SEISS Grants 01/11/2020 – 31/01/2021

The portal for claiming the third SEISS grant opens on 30/11/2020 and HMRC has published new eligibility criteria, the taxpayer must:

  • be currently trading and impacted by reduced demand, or have been trading but be temporarily unable to do so due to coronavirus; and
  • intend to continue to trade, and
  • reasonably believe that the impact on their business will cause a significant reduction in their trading profits due to reduced business activity, capacity or demand or inability to trade due to coronavirus during the period 1 November to 29 January 2021. Reduction in profits due to increased costs does not count for this purpose.

No claim can be made where the reduced activity, capacity or demand is caused solely because the person is required to self-isolate, or care for a person required to self-isolate, as a result of travelling to the UK.

Thursday 12th November

CJRS Extension

The HMRC have finally announced full details of the extension to the job retention scheme.  There are some minor changes to take note of. The key takeaway points are:

The scheme is UK wide and will run from 1st November to 31st March, with a review of the rules in January.  It is offering the same level of support as August, which is 80% of wages covered up to a cap of £2,500.   Employees can be flexibly furloughed, meaning they can work any number of hours or shift pattern and the furlough grant will cover the hours not worked.  Employer NIC and pensions are not covered by the grant and will need to be paid for by the employer.

Employees not previously furloughed can be included as well as new hires and other employees that were previous not eligible, provided that they had earning reported on an FPS between 20 March and 30 October 2020.   This means directors on annual payrolls who were previously not eligible can now be included.  In addition, employees made redundant after the 23 September can be re-hired and furloughed.

The calculation method for the reference pay and usual hours varies, if the employee previously eligible (whether furloughed or not) you must use the same basis of calculating reference pay and usual hours as in August.  If the employees that were previously not eligible, their reference pay, and usual hours must be based on:

Reference Pay

  • Fixed salary – last pay period before 30 October
  • Variable pay – based on the average between the later of their start date of their employment or 6 April 20 and the day before their CJRS furlough periods begins

Usual Hours

  • Fixed hours – contracted hours pay period ending/before 30 October
  • Variable hours – the average hours worked between the start date of the 20/21 tax year and the day before their CJRS furlough periods begins

Claims can be made now; the Claim deadline is the 14th day following the month being claimed for and any claims for the periods up to the end of October need to be made by the 30 November.

As before employers must confirm to their employee in writing that they have been furloughed and keep records of how many hours worked and the number of hours they are furloughed.  These records need to be kept for 6 years.

Please contact your support accountant with any questions.

Thursday 5th November

Furlough

Following the Prime Minister’s announcement on 31 October, additional financial support is being made available to individuals and businesses, including an extension to the furlough scheme (Coronavirus Job Retention Scheme). The Scheme has been extended for a month with employees receiving 80% of their current salary for hours not worked and further economic support announced.

The essentials:

  • the JSS Scheme outlined last week is suspended until the new extension to furlough ends
  • furlough scheme extended to the end of March 2021 (with a review in January)
  • the Government pays 80% of pay for hours not worked capped at £2,500
  • the Employer pays full pay etc for hours worked and NIC and pension contributions for hours not worked
  • Employees must have been on the payroll by 30/10/2020
  • it will apply throughout the UK
  • the retention incentive for employers to keep people in work until the end of January will fall away (and will be redeployed “when appropriate”).

Self Employed Income Support Scheme (SEISS) extension

The first grant under the SEISS extension, covering the three months 01/11/2020 to 31/01/2021, was due to be 40% of average profits capped at £3,750. It has now been announced that the grant  has been increased for three months from 1st November to 80% of average profits and that the maximum grant will be £7500.

HMRC say that the claim portal will be available from 30/11/2020.

Scotland and Wales

The Chancellor confirmed that furlough support will continue across the UK without distinction.