Flexible Furlough from 1 July under revised CJRS

29 May: Changes to the Coronavirus Job Retention Scheme (CJRS) will apply a month earlier than expected. From 1 July the scheme will allow part-time working, but staff must have been furloughed by 10 June to be eligible.

The Chancellor has announced the government’s plans to change the CJRS which will now be re-engineered to support businesses sending staff back to work. Employers will be able to put staff on part-time furlough, claiming the CJRS grant for a portion of their salary.

Critically, employers will only be able to claim going forward if they have previously claimed under the pre-1 July scheme.

Note too that as there is a three-week minimum furlough requirement under the current rules, it follows that any new period of furlough leave must have started by 10 June 2020 to be complete when the current scheme ends on 30 June and so ensure the employee remains eligible from 1 July.

“The job furlough scheme has been vital for the protection of businesses and jobs, but it is right that it should evolve to match government’s phased approach to re-opening the economy,” said Michael Izza, ICAEW’s Chief Executive, following the announcement.  “In that spirit, allowing employees to return to work part-time from 1 July is a sensible move, and in principle it is fair that employers should be prepared to take some of the financial burden off the tax-payer as businesses start up again.
“However, we would like to see a higher level of support retained for sectors which will still be barred from doing business, such as hospitality and leisure. Otherwise there is a real risk for these companies that a sudden increase in staff costs, without the ability to generate revenue, will cause a wave of avoidable redundancies and closures.”

The proposed changes also introduce a new limit to the number of staff who can be included on a claim.

This will be based on the maximum staff ever included in any single pre 1 July claim. The Chancellor also confirmed that from 1 August the CJRS grant will no longer cover the cost of employers’ National Insurance nor pension contributions with employers expected to cover the costs.

Anita Monteith of ICAEW’s Tax Faculty, said: “Employers will need to take great care not to be caught out by the cut-off date for furloughing additional employees and for making claims.”

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What is changing?

For July the grant will be available on the same basis as now (the lesser of 80% of pay and £2,500). The intention is that the government will reduce its contribution over the remaining months of the scheme – August to October – with a corresponding increase in the employer contribution.

– August – the CJRS will continue to pay 80% of wages
– September – the CJRS will pay 70% of wages while employers will take on the other 10%
– October – the CJRS will pay 60% of wages while employers will take on the other 20%

Throughout the duration of the furlough scheme it is important to remember that the employee will continue to receive their salary entitlement in full, as set out by the terms of their employment contract. The CJRS is a grant paid to the employer, and it is this grant which is now being scaled back, the calculation being based on the salary paid for any period while the employee is being furloughed.

The revised scheme has many of the same features as the current scheme which runs between 1 March and 30 June 2020, but there will be some significant changes intended to encourage those previously furloughed back to work. In summary, these are:

– Employees who were previously furloughed will be able to return to work on a flexible part-time basis.

– For those staff who are furloughed part-time, employers will be required to pay for the cost of the time staff are working. A grant will be available for the cost of their furloughed hours.

Employees must have been furloughed under the current scheme (CJRS V1) for them to be eligible for a furlough grant under the revised scheme (CJRS V2). So, in practice, only employees who have been included in a furlough grant claim made before 1 July 2020 can be furloughed under CJRS V2.

The rules for CJRS V1 covered only the period 1 March 2020 to 30 June 2020, para 12, The Coronavirus Act 2020 Functions of her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction.
This means the furlough scheme is closed to new entrants after 30 June 2020.

The Tax Faculty urges employers and agents who have yet to submit claims under the scheme, to do so now as a matter of urgency.

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Further points to note about CJRS V2

a. A new minimum reporting period of one week will apply from 1 August 2020. More frequent claims will not be accepted, but the reporting period can be longer.

b. 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.

c. The grant will be based on the same premise as now, so the employee must be paid the lesser of 80% of reference salary and £2,500 per month. The government contribution to the 80% of reference salary is being reduced as the scheme progresses.

d. From 1 August onwards, the scheme will no longer cover the cost of employers’ National Insurance nor pension contributions applicable to the grant.

e. The new calculation will apply from 1 July to factor in the cost of hours worked to hours furloughed ratio.

f. Employers can claim the grant for the hours their employees are not working calculated by reference to their usual hours worked in a claim period. Further details will be included in future guidance.

g. Employers will need to report hours worked and the usual hours an employee would be expected to work in a claim period.

h. For worked hours, employees will be paid by their employer subject to their employment contract and employers will be responsible for paying the tax and NICs due on those amounts

i. There will be a new maximum limit to the number of staff who can be included on a claim. This will be based on the maximum staff ever included in a single claim under CJRS V1.

j. CJRS V2 will end on 31 October 2020.

A new factsheet giving further details on the changes to CJRS and SEISS is available from gov.uk 

HMRC is hoping to publish detailed guidance on CJRS V2 on 12 June 2020.

The Coronavirus Job Retention Scheme is changing – Summary

From 1 July, employers can bring back to work employees that have previously been furloughed for any amount of time and any shift pattern, while still being able to claim CJRS grant for their normal hours not worked.

When claiming the CJRS grant for furloughed hours employers will need to report and claim for a minimum period of a week. The scheme will close to new entrants from 30 June. From this point onwards, employers will only be able to furlough employees that they have furloughed for a full 3 week period prior to 30 June.

This means that the final date by which an employer can furlough an employee for the first time will be 10 June, in order for the current 3 week furlough period to be completed by 30 June.

Employers will have until 31 July to make any claims in respect of the period to 30 June.

Further guidance on flexible furloughing and how employers should calculate claims will be published on 12 June.

Further details can be found on the ICAEW website as below

https://www.icaew.com/coronavirus/uk-practical-business-advice-covid-19

Local Authority Small Business Discretionary Grant – Coronavirus update

 

The Government is making additional funding available to allow us to further support Small Business. This money is in addition to the Small Business Grants Funds and the Retail, Hospitality and Leisure Grants Fund announced last month.

Prioritised for these types of business

  1. Small businesses in shared offices or other flexible workspaces. Examples could include units in industrial parks, science parks and incubators which do not have their own business rates assessment
  2. Regular market traders with fixed building costs, such as rent, who do not have their own business rates assessment
  3. Bed & Breakfasts which pay Council Tax instead of business rates
  4. Charity properties in receipt of charitable business rates relief which would otherwise have been eligible for Small Business Rates Relief or Rural Rate Relief.

Other businesses

If your businesses is not on the above list, you may still apply and will need to supply evidence it falls into one of the following categories:

  • Businesses which occupy property, or part of a property, with a rateable value or annual rent or annual mortgage payments below £51,000.
  • Businesses which can demonstrate that they have suffered a significant fall in income due to the COVID-19 crisis
  • Business with fewer than 50 employees
  • Businesses that were trading on or before 11th March 2020.

There will be three levels of grant payments. The maximum will be £25,000. There will also be grants of £10,000. Local authorities will have discretion to make payments of any amount under £10,000. It will be for councils to adapt this approach to local circumstances.

Ineligible businesses

Businesses which are eligible for the existing grant schemes or Self-employed Income Support Scheme will be ineligible for this grant. Businesses which received the Small Business Grant Fund (where businesses in England who are in receipt of Small Business Rates Relief (SBRR) and Rural Rates Relief (RRR) in the business rates system were eligible for a payment) are also ineligible for this Discretionary Grant.

Click on the link below to read about the Guidance published on the Government website on 2nd May:

Read about the top-up to local business grant funds scheme on the government website

Check out your local authority website to see if this is available in your area and if you are eligible!

Tom Bathgate MBA
tom.bathgate@broadthunder.co.uk

Staying alert and safe (social distancing)

Staying alert and safe (social distancing)
Guidance Published 11 May 2020

(Section 3 Businesses and Venues)

Everyone’s actions have helped to reduce the transmission of coronavirus in our communities. As the UK moves to the next phase in our fight against coronavirus, the most important thing we can do is to stay alert, control the virus, and in doing so, save lives.

This guidance applies in England – people in Scotland, Wales and Northern Ireland should follow the specific rules in those parts of the UK.

The government has set out its plan to return life to as near normal as we can, for as many people as we can, as quickly and fairly as possible in order to safeguard livelihoods, but in a way that is safe and continues to protect our NHS.

As part of this plan:

  • People and employers should stay safe in public spaces and workplaces by following “COVID-19 secure” guidelines. This should enable more people to go back to work, where they cannot work from home, and encourage more vulnerable children and the children of critical workers to go to school or childcare as already permitted
  • You should stay safe when you leave home: washing your hands regularly, maintaining social distancing, and ensuring you do not gather in groups of more than two, except with members of your household or for other specific exceptions set out in law
  • You must continue to stay home except for a limited set of reasons but – in line with scientific advice – can take part in more outdoor activities from Wednesday 13 May

The government has set out a roadmap for lifting further restrictions and opening more businesses and venues, but this plan is dependent on successfully controlling the spread of the virus. If the evidence shows sufficient progress is not being made in controlling the virus, then the lifting of restrictions may have to be delayed. If, after lifting restrictions, the government sees a concerning rise in the infection rate, then it may have to re-impose some restrictions in as targeted a way as possible.

This guidance explains the measures that will help you to stay safe as we continue to respond to the challenges of coronavirus. Key parts of these measures are underpinned by law, which sets out clearly what you must and must not do – every person in the country must continue to comply with this. The relevant authorities, including the police, have the powers to enforce the law – including through fines and dispersing gatherings.

Some of the changes being made to the regulations will not take effect until Wednesday 13 May – where relevant, this is flagged in this guidance. Until that time, you should not: exercise with people from other households, spend time outdoors for recreation, use a sports court, or move home unless reasonably necessary.

Find answers to the most frequently asked questions about what you should and should not do during the coronavirus outbreak on our FAQs page.

  1. Protecting different groups of people

This guidance is for the general public who are fit and well. There is separate, specific guidance on isolation for households with a possible coronavirus infection.

Some people, including those aged 70 and over, those with specific chronic pre-existing conditions and pregnant women, are clinically vulnerable, meaning they are at higher risk of severe illness from coronavirus’. As we begin to ease restrictions, this group who are clinically vulnerable – see section 8 – should continue to take particular care to minimise contact with others outside their household.

There is a further group of people who are defined, also on medical grounds, as clinically extremely vulnerable to coronavirus – that is, people with specific serious health conditions. They are advised to continue shielding measures to keep themselves safe by staying at home and avoiding all contact with others, except for essential medical treatment or support.

  1. Staying at home

It is still very important that people stay home unless necessary to go out for specific reasons set out in law. These include:

  • for work, where you cannot work from home
  • going to shops that are permitted to be open – to get things like food and medicine, and to collect goods ordered online or on the phone
  • to exercise or, from Wednesday 13 May, spend time outdoors for recreation
  • any medical need, to donate blood, avoid injury or illness, escape risk of harm, or to provide care or to help a vulnerable person

Where parents or someone with parental responsibility do not live in the same household, children under 18 can be moved between their parents’ homes to continue existing arrangements for access and contact.

The government has also identified a number of critical workers whose children can still go to school or their childcare provider. This critical worker definition does not affect whether or not you can travel to work – if you are not a critical worker, you may still travel to work if you cannot work from home. However, if you, or a member of your household are unwell with symptoms of coronavirus, you should isolate and should not travel to or attend the workplace.

Critical workers and parents or guardians of vulnerable children may leave their home to take children to and from school or their childcare provider.

You can also attend the funeral of a close family member or member of your household (or, of a friend, if no one from their close family or household is attending). Religious ministers or leaders can leave their homes to go to their place of worship, but these should remain closed to the public

You may also leave or be outside of your home in order to access other critical public services, such as social services, support provided to victims, services provided by the Department for Work and Pensions, to fulfil a legal obligation, or to move home in line with the government’s guidance.

A fuller list of the reasons you can leave home is set out in the regulations.

When you do need to go out, you should follow the guidelines on staying safe outside your home. Most importantly, this includes the key advice that you should stay two metres apart from anyone outside of your household. Face coverings can help us protect each other and reduce the spread of the disease if you are in an enclosed space where social distancing isn’t possible and where you will come into contact with people you do not normally meet. This is most relevant for short periods indoors in crowded areas, for example on public transport or in some shops.

It is still not permitted to leave your house to visit friends and family in their home. The government is looking at how to facilitate greater contact with close family or friends, and will explain how this can be done safely in the coming weeks.

By following this guidance, you are helping to protect yourself, your family, the NHS and your community.

Further guidance on the mental health and wellbeing aspects of coronavirus (COVID-19) has been issued.

  1. Businesses and venues

For the time being, certain businesses and venues are required by law to stay closed to the public. These include:

  • restaurants and cafes, other than for takeaway
  • pubs, cinemas, theatres and nightclubs
  • clothing and electronics stores; hair, beauty and nail salons; and outdoor and indoor markets (not selling food)
  • libraries, community centres, and youth centres
  • indoor and outdoor leisure facilities such as bowling alleys, gyms, arcades and soft play facilities
  • some communal places within parks, such as playgrounds and outdoor gyms
  • places of worship (except for funerals)
  • hotels, hostels, bed and breakfasts, campsites, caravan parks, and boarding houses for commercial/leisure use, excluding use by those who live in them permanently, those who are unable to return home and critical workers where they need to for work

Food retailers and food markets, hardware stores, garden centres (from Wednesday 13 May) and certain other retailers can remain open. Other businesses can remain open and their employees can travel to work, where they cannot work from home. From Wednesday 13 May, the government will also allow outdoor sports facilities – such as tennis and basketball courts, golf courses and bowling greens – to open, but you should only use these alone, with members of your household, or with one other person from outside your household, while keeping two metres apart at all times.

  1. Visiting public places

You can exercise outside as often as you wish and from Wednesday 13 May, you can also sit and rest outside – exercise or recreation can be alone, with members of your household, or with one other person from outside your household, while keeping two metres apart at all times.

From Wednesday 13 May, you may drive to outdoor publicly accessible open spaces irrespective of distance, but should follow social distancing guidance whilst you are there. You should plan ahead to ensure that, where you are visiting places like National Parks, you have checked that they are open and appropriately prepared for visitors. You should not go to ticketed outdoor leisure venues, where there is a higher risk of close contact and touching surfaces.

When travelling to outdoor spaces, it is important that people respect the rules in Scotland, Wales and Northern Ireland and do not travel to different parts of the UK where their intended activities there would be prohibited by legislation passed by the relevant devolved administration.

  1. Public gatherings

To ensure people are social distancing, the government has prohibited by law all public gatherings of more than two people, except for reasons set out in the regulations. These include:

  • where the gathering is of a group of people who live together in the same household – this means that a parent can, for example, take their children to the shops, although you are advised to do so only if there is no option to leave them at home
  • where the gathering is essential for work purposes – but workers should try to minimise all meetings and other gatherings in the workplace

It is important that everyone continues to act responsibly in public places, as the large majority have done to date. The infection rate will increase if people begin to break the rules.

  1. Going to work

You should travel to work, including to provide voluntary or charitable services, where you cannot work from home and your workplace is open.

With the exception of the organisations covered above in the section on closing businesses and venues, the government has not required any other businesses to close to the public – it is important for business to carry on.

All workers who cannot work from home should travel to work if their workplace is open. Sectors of the economy that are allowed to be open should be open – such as food production, construction, manufacturing, logistics, distribution and scientific research. As soon as practicable, workplaces should be set up to meet the new COVID-19 secure guidelines. These will keep you as safe as possible, whilst allowing as many people as possible to resume their livelihoods. In particular, workplaces should, where possible, ensure employees can maintain a two-metre distance from others, and wash their hands regularly.

At all times, workers should follow the guidance on self-isolation if they or anyone in their household shows coronavirus symptoms. You should not go into work if you are showing symptoms, or if you or any of your household are self-isolating. This is consistent with advice from the Chief Medical Officer.

There is specific guidance in relation to work carried out in people’s homes – for example by tradespeople carrying out repairs and maintenance, cleaners, or those providing paid-for childcare in a child’s home.

  1. Enforcing the law

The police and local authorities have the powers to enforce the requirements set out in law if people do not comply with them. The police will act with discretion and common sense in applying these measures, but if you breach the law, they may instruct you to go home or leave an area, or arrest you where they believe it necessary. They may also instruct you to take steps to stop your children breaking these legal requirements if they have already done so.

From Wednesday 13 May, the government is introducing higher fines for those who do not comply, to reflect the increased risk to others of breaking the rules as we begin to ease the restrictions, and people return to work. Once these new limits are in place, if the police believe that you have broken the law – or if you refuse to follow their instructions enforcing the law – a police officer may issue you with a fixed penalty notice for £100 (reduced to £50 if paid within 14 days). If you have already received a fixed penalty notice, the amount will increase to £200 and double on each further repeat offence, up to a maximum of £3200. Until Wednesday 13 May, the fixed penalty notice is £60, reduced to £30 if paid within 14 days. If you have already received a fixed penalty notice, the amount will increase to £120 and double on each further repeat offence, up to a maximum of £960.

Similarly, a business or venue operating in contravention of the law will be committing an offence. Local authorities (for example, Environmental Health and Trading Standards officers) will monitor compliance, with support from the police if appropriate. Businesses and venues that breach the law will be subject to prohibition notices and fixed penalty notices. Businesses that continue to contravene the law will be forced to close down.

For both individuals and companies, if you do not pay, you may also be taken to court, with magistrates able to impose potentially unlimited fines.

  1. Clinically vulnerable people

If you have any of the following health conditions, you are clinically vulnerable, meaning you are at higher risk of severe illness from coronavirus. You are advised to stay at home as much as possible and, if you do go out, take particular care to minimise contact with others outside your household.

Clinically vulnerable people are those who are:

  • aged 70 or older (regardless of medical conditions)
  • under 70 with an underlying health condition listed below (that is, anyone instructed to get a flu jab as an adult each year on medical grounds):
  • chronic (long-term) mild to moderate respiratory diseases, such as asthma, chronic obstructive pulmonary disease (COPD), emphysema or bronchitis
  • chronic heart disease, such as heart failure
  • chronic kidney disease
  • chronic liver disease, such as hepatitis
  • chronic neurological conditions, such as Parkinson’s disease, motor neurone disease, multiple sclerosis (MS), or cerebral palsy
  • diabetes
  • a weakened immune system as the result of certain conditions, treatments like chemotherapy, or medicines such as steroid tablets
  • being seriously overweight (a body mass index (BMI) of 40 or above)
  • pregnant women

As above, there is a further category of people with serious underlying health conditions who are clinically extremely vulnerable, meaning they are at very high risk of severe illness from coronavirus. You, your family and carers should be aware of the guidance on shielding which provides information on how to protect yourself still further should you wish to.

  1. Communicating with the public

The government will continue to keep the public informed of the impacts of coronavirus on the UK, and the law and guidance that is in place to protect the public.

The measures set out will be kept under constant review, and formally revisited at the end of May. They will be relaxed if the scientific evidence shows that this is possible. If people begin to act recklessly, which could impact on the transmission of coronavirus in our communities, further restrictions will have to be implemented again.

 

Bounce Back Loans – Rishi Sunak unveils 100% state-backed loans for small firms

Small firms are to get access to 100% taxpayer-backed loans after they raised concerns about slow access to existing coronavirus rescue schemes.

Chancellor Rishi Sunak told the House of Commons the scheme would start next week, offering firms loans up to £50,000 within days of applying.

It aims to unlock a backlog of credit checks by banks amid fears many small firms could fold before getting loans.

The scheme requires filling in a two-page self-certification form online.

The loan terms mean that no capital or interest repayments will be due for one year. Instead, the government will pay the interest for the first 12 months.

Banks have come under fire for delays in handing out loans, but have blamed the heavy workload, need to complete the necessary credit checks, and a shortage of staff.

Underwriting the loans removes the risk that banks will not get their money back, which Mr Sunak hopes will speed up the application process. The new “microloan scheme” would provide a “simple, quick, easy” solution, he told the Commons.

In a statement issued on behalf of the major lenders to small firms, including Barclays and Lloyds, trade body UK Finance said the “welcome changes should enable banks to provide finance to businesses more quickly”.

In another significant change, firms applying for the new loans will now only have to prove that they were viable in the past before the crisis, not that they will viable after the crisis. Companies have complained they struggled to prove their future potential with some much uncertainty over the economic environment.

The chancellor had come under pressure to underwrite all loans, not just those up to £50,000. But he said he was not prepared to do this as he needed to balance the risk to the taxpayer with the needs of small businesses.

He said: “I’ve heard some calls for the government to underwrite all our loan schemes with 100% guarantees. I remain unconvinced by the case for doing that universally.

“We should not ask the ordinary taxpayers of today and tomorrow to bear the entire risk of lending almost unlimited sums to businesses who may, in some cases, have very little prospect of paying those loans back and not necessarily because of the impact of the coronavirus.”

Unlike the existing loan scheme, banks will not retain any of the risk for these loans, which could stretch into the billions or tens of billions depending on how long the crisis lasts.

And the chairman of the Federation of Small Businesses, Mike Cherry, said it would “give hope to thousands” of firms.

“To date, the existing interruption loan scheme has not been working for the small firms that make-up 99% of our business community.

“The decision by the chancellor to listen to our recommendation for a 100% guarantee on smaller loans, alongside the creation of a new fast-track system for those applying for them, will give hope to thousands.”

The Treasury’s new scheme means that huge numbers of the smallest and most vulnerable companies in the country can now get a bank loan of up to £50,000 with no interest payable in the first year. To persuade banks to lend the money, the taxpayer will cover 100pc of their losses when a borrower defaults.

It is intended to be up and running from next Monday with a simple online application procedure, and all firms trading as of March 1 will be able to get cash.

The loans will be funnelled through 48 lenders accredited by the state-owned British Business Bank and firms should receive their money within 24 hours, the Chancellor said. All lending will be fee-free and interest-free for 12 months, and can be paid back without early repayment charges.

It is thought that shifting responsibility for all losses onto the public sector in the Bounce Back scheme will encourage lenders to get money to the smallest companies more quickly.

Unveiling the new scheme, Mr Sunak said that he had to “balance the risk to the taxpayer with the need to support our smallest businesses”.

Bounce Back loans will be available to any smaller company for up to 25pc of their turnover, capped at £50,000. The effective £200,000 limit means it would cover all of UK’s the 5.6 million micro-businesses with up to nine employees, which turned over £900bn in total or £160,000 each last year according to Government figures.

Dame Caroline Fairbairn, director-general of the Confederation of British Industry, said thousands of businesses could be saved by the lifeline.

She added: “Banks now need to continue their work in overdrive to get the loans flowing faster.”

The Treasury has already responded to criticism over the main CBILS, where loans of up to £5m are 80pc guaranteed, by banning demands for personal guarantees where banks have a claim over a director’s property on loans below £250,000.

Sources: BBC New; GOV.UK; Daily Telegraph (Russell Lynch, Economics Editor 27/04/2020)

Edit and Emphasis: T. Bathgate MBA