Further Help from the UK Government for Employers and the Self-employed

Further Help from the UK Government

November 25, 2020

There have been many changes that the government has been forced to make in light of the Covid 19 pandemic. In fact, the severity and the infectiousness has been disarming as one can see by the frequently changing government policy. On one hand the government was preparing for businesses to get back to some semblance of economic normality, and on the other, we find that a full-scale lockdown has been deemed prudent in light of the possibility of 4000 more cases a day. Due to this the government has had to make several modifications to schemes. For instance, the Wage Subsidy Scheme no longer figures. The Job Support Scheme (JSS) that was scheduled to start on 1st November 2020 has now been pushed to December 2020. The Furlough scheme [under the auspices of the Coronavirus Job Retention Scheme (CJRS)] that was to end on 31st October 2020 has received its second extension coincidentally on 31st October 2020.

For employers all these changes are very difficult to cope with as the calculations of wages and taxes changes and then one has to consider the fact that there has been no relaxation given to payroll related reporting. Thus, many employers find themselves considering employing a tax advisor or an accounting firm to look after these loose ends. Doshi Accounting deals not only with payroll related services (furlough claims, compliance checks and etc.) but also caters to accounting, bookkeeping, VAT and tax services. Many small business owners are unsure as whether being a small business merits them for accountancy services, after all, why bother? But with the changes to the legislation, being compliant has become increasingly more difficult for everyone. The HMRC has also launched compliance checks to see if furlough claims have been properly made with penalties starting from £500 for claims they consider fraudulent.

The New Winter Measures – What Aid You Can Expect from the Government

For Employers

The Coronavirus Job Retention Scheme-

  • - Has been extended from its scheduled start on 1st November 2020 to spring 2021. The previous furlough scheme was to end on 31st October 2020 but shall seamlessly merge into this extension.
  • - This scheme will be far more generous than its furlough predecessor in September and October because now 80% of the grant (the cap amount is £2,500) will be government funded.
  • - Employers are expected to pay for the national insurance contributions and work place pension contributions for both the usual hours that the employees work as well as the hours the employees are on furlough (thus, non-reclaimable employment expense).
  • - Employees can be put on full furlough or the existing flexible furlough system can be considered with the government paying only for the usual hours that the employee is not working up to the above stated cap amount.
  • - To be eligible the employer merely needs a PAYE scheme and bank account belonging to the UK. Absolutely public funded organisations of course, cannot apply.
  • - Contracts are more flexible now. Also, the calculation of the usual hours would be based on how furlough was calculated previously. Information as to how the claims are to be made will be provided later though employers are encouraged to commence putting their employees on furlough.
  • - Whether the employer or employee has previously been using the CJRS scheme is not an issue as fresh claims will be acceptable however, the period needs to be including a minimum of 7 consecutive days of furlough.
  • - For employees to join this scheme they need to have their RTI submitted from their employer’s PAYE scheme by the 30th of October 2020. This submission latest needed to be made by 23:59 pm.

Thus, the total employment costs will only be 5% which is very much less than the 1/3rd wage cost that had been earlier proposed in the former draft of the Job Support Scheme. Also, employers can choose to top-up the employee’s wages on a voluntary basis as per their discretion. Flexible furlough though is much more challenging to calculate. Doshi Accounting does file furlough claims and in case of any CJRS Compliance Check from the HMRC, it does assist its clients with the same. The HMRC after all, only wants to confirm if the right amount has been claimed. If you have been filing the claims yourself and would like an expert’s opinion you could always connect to us as we are happy to assist.

The Job Support Scheme

  • - This scheme has undergone a lot of revisions. For now, two variations have been proposed, the open version and the second being the closed version of the scheme.
  • - In the JSS open scheme, it is mainly for businesses that are running where if the employee works at least 20% of the normal hours worked the government will pay 61.67% on the usual hours that are not worked. Like furlough, the employers bear around 5% of the cost. £1,541.75 is the cap amount for the government claim.
  • - In the closed JSS scheme, businesses that are forced to close due to the lockdown have been considered.
  • - Two-third of the wages based upon the usual hours will be funded by the government to the employees for whatever time they have not worked. £2,083.33 is the cap amount.
  • - In the closed scheme the employer need not contribute since the business is not running. However, the employer is allowed to voluntarily top-up the wages if desired.

For the self-employed (and other relief measures)

Mortgage Holidays

Holidays towards paying those hefty mortgage payments are to continue in light of the new restrictions. If you are yet to take one you can avail a six-month mortgage holiday. For those who have already taken one they can avail a further six months without it adversely affecting their credit score.

Business Grants

Grants have been offered starting from £667(bi-weekly) to £3,000 per month depending on what the rateable value of the property is.

  • - £667 (bi-weekly) or £1,334 a month if the property has a rateable value between £15k or below
  • - £1,000 (bi-weekly) or £2,000 a month per month if the property has a rateable value between £15k to £51k
  • - £1,500 (bi-weekly) or £3,000 a month if the property has a rateable value between £51k or above that

Thus, with all these changes employers are finding it difficult as to how to work out the taxes and payments to liable to their staff while individuals are getting confused as to how much to pay in self-assessment. Doshi Accountants can assist you in navigating in this complex web of changes and compliances.