The Government have put various support measures in place. It is important that you do not miss the deadlines for claiming help under the various schemes; and also that you understand how grants received are treated for tax and National Insurance purposes.
Coronavirus Job Retention Scheme
The Coronavirus Job Retention Scheme enabled employers to keep staff on the books by furloughing them and claiming a grant from the Government to pay the employees 80% of their wages (capped at £2,500 per month) while on furlough. Until the end of July 2020, employers could also claim the associated National Insurance and minimum employer pension contributions due under auto-enrolment back from the Government. Claims for grants for the first phase of the scheme, which ran to 30 June 2020, had to be made by 31 July 2020.
In the second phase of the scheme, which runs from 1 July 2020 to 31 October 2020, employees can come back to work part time, while being furloughed for the remainder of the time, with the employer claiming a grant under the CJRS for the employee’s furloughed hours.
The scheme comes to an end on 31 October 2020. As the scheme winds down, the amount that employers can claim is reduced to 70% of the employee’s pay (capped at £2,187.50 per month) for September and to 60% of the employee’s pay (capped at £1,875) for October. However, furloughed employees must continue to be paid 80% of their pay while furloughed up to the equivalent of £2,500 a month, with the employer making up the difference.
Claims for the second phase of the scheme must be made by 30 November 2020.
Grants received under the CJRS are taxable and should be taken into account when working out your taxable profits.
Speak to BFMS to check that you have claimed what you are entitled to under the scheme and to understand how to treat the grant payments for tax purposes.
Coronavirus Job Retention Bonus
To encourage employers to retain furloughed employees, employers will receive a bonus of £1,000 for each furloughed employee who remains continuously employed until at least 31 January 2021, as long as the employee is paid, on average, at least £520 per month in November 2020, December 2020 and January 2021. Claims for the bonus can be made from February 2021.
Find out how you can benefit from the bonus, Just give us a call on 015395 36163.
Self Employment Income Support Scheme
The Self Employment Income Support Scheme (SEISS) provides grants to self-employed taxpayers whose businesses were adversely affected by Coronavirus. To qualify, the taxpayer’s income from self-employment must account for at least half of their income and must not be more than £50,000. The taxpayer must have traded in 2019/20 and also in 2020/21, or be intending to do so. They must also have filed their 2018/19 tax return by 23 April 2020.
The grants are based on average profits over the three tax years 2016/17, 2017/18 and 2018/19. The first grant was worth 80% of three months’ average profits for those years, capped at £7,500, and the second 70% of those profits capped at £6,570. The second grant must be claimed by 19 October 2020.
The scheme has now been extended and will provide two further grants – one covering the period from November 2020 to January 2021 and the other covering the period from February to April 2021. The first grant will be worth 20% of average monthly trading profits for three months, capped at £1,875 in total. The level of the second grant will be announced in due course.
Grants are taxable and liable to National Insurance, and as such, must be taken into account in working out profits for self-employment.
There are various loans and grants available to help businesses survive the Covid-19 pandemic.
The available support includes Bounce Back loans of between £2,000 and 25% of turnover, to a maximum of £50,000.