Directors and Furlough

There is one question we have been asked more than any other by directors since the furloughing guidelines were issued…

Can I furlough myself? 

We would like to share our updated thoughts on this subject and why you don’t have to (completely) make your mind up just yet. 

Basically, you are asking two questions…

1. Can I Furlough myself? 
2. Can I claim back 80% of my salary from the government?

Coronavirus Job Retention Scheme

We thought it would be useful to share our understanding of the recently announced Coronavirus Job Retention Scheme. Please feel free to share this information with anyone who might need it.
  
Coronavirus Job Retention Scheme

Firstly, it is important to remember we are not employment lawyers and you should always seek formal legal advice before taking any action. 

Under the new Coronavirus Job Retention scheme, government grants will cover 80% of the salary of PAYE employees who would otherwise have been laid off during this crisis. The scheme, open to any employer in the country, will cover the cost of wages backdated to 01 March 2020 and will be open before the end of April. It will continue for at least three months and can include workers who were in employment on 28 February 2020.

Government Help for the Self-Employed

Government Help for the Self-Employed:

Last night the Chancellor announced financial support for the self-employed – i.e. sole traders and partners. 

Unfortunately the support excludes company directors who earn dividends from their own limited company.

An online petition has been started to encourage the Government to give the same support to company directors, you can view the petition here: https://www.change.org/p/uk-parliament-small-ltd-company-directors-to-get-government-support-like-the-employed-and-self-employed

Support for sole traders and partners

Here are the details we know so far for sole trader and partners:-

-It’s based on your taxable profits in the three years to 05 April 2019. 
-You will receive 80% of your average monthly earnings over that period, up to £2,500.  Initially for the three months i.e. 3/12ths of your average annual earnings. 
-It will be paid in June.  It comes in the form of a grant, meaning it is not repayable.

The full government rules on the self-employed are set out here:-

https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

New Self-Employment Income Support Scheme

The Chancellor has just announced a new Self-Employment Income Support Scheme to help the self-employed through the coronavirus pandemic.

Whilst we don’t have the full details of the scheme yet, the key points to note are….

• A grant will be payable to the self-employed to cover 80% of monthly profits
• This will be calculated using the average profits for the past 3 years
• Capped at £2,500 per month
• The system is expected to be live in June – please be aware of this for your cashflow
• Self-employed with trading profits above £50,000 appear to be excluded
• Newly self-employed persons since April 2019 appear to be excluded
• Self-employed can continue to work whilst in receipt of the grant
• HMRC will contact the self-employed directly in order to make a claim
• It appears that this still ignores Directors of limited companies who are paid a basic salary with the balance as dividends – but we will await the guidance for confirmation

I will be reading the full details when published and be updating our clients with a full overview ASAP.

In the interim if you have any queries or concerns please don't hesitate to drop me a line.

Best wishes,

Steve

Steven Hillman ACA
Chartered Accountant
https://www.hillmans.co.uk/covid-19-updates

North Somerset Council Business Grant Schemes Open

Just a quick update to advise North Somerset Council has opened the application process for the COVID-19 Business Grant Schemes.

To apply to receive the grant you must email: n-somersetnndr@liberata.com and provide the following information:

• business name (i.e. sole trader or limited company name),

• property address,
• company registration number (as registered with companies house),
• VAT registration number (if applicable),
• account details (bank account number, sort code, business account name),
• your business rates account reference (the number on the business rates bill beginning with 7000, or 06) and;
• a full contact name, number and email address.

•You can read full details here at the North Somerset Council website:
https://innorthsomerset.co.uk/support-for-those-affected-by-covid-19

If you need any support please don't hesitate to drop me a line.

Best wishes,

Steve

Steven Hillman ACA

Chartered Accountant

Coronavirus (COVID-19) - Rumours of statutory payments for the self-employed

The rumours in the press and online of the self-employed getting the lower of £2917 or 80% of net earnings over last 3 years have not been confirmed by the Government. This information has been taken from an amendment to a parliamentary bill that did not get enough support in parliament to get approved.

We are in a similar position with the 80% Coronavirus Job Retention Scheme and whether this is applicable to directors, unfortunately we are still awaiting confirmation from the Government on this.

However, I am hopeful that we will hear an announcement very soon confirming the position for the self-employed and directors.

I will provide an update as soon as I receive news.

In the interim if you need any business or personal support please don’t hesitate to drop me a line.

Best wishes,

Steve

Steven Hillman ACA
Chartered Accountant

Read our latest COVID-19 updates here: https://www.hillmans.co.uk/covid-19-updates

COVID-19 Update 21-03-2020

Last night the Chancellor stood in 10 Downing Street and announced some new support for small businesses.  They can be summarised as…

Coronavirus Job Retention Scheme

HMRC will reimburse 80% of furloughed (basically another word for redundant) workers wage costs, up to a cap of £2,500 per person per month. HMRC are working urgently to set up a system for reimbursement as currently their systems are not able to facilitate payments to employers.

We haven’t noted any detail in the announcement as to whether this reimbursement will apply to company directors in owner managed businesses. There is an argument that a company with no directors working in the business is no longer a trading business. We should get more detail from HMRC next week, and we will advise further as soon as we can on this. 

While HMRC is working urgently to set up a system for reimbursement, we understand the existing system is not set up to facilitate payments to employers. 

Business that need short-term cash flow support, may benefit from the VAT deferral announced below and may also be eligible to apply for a Coronavirus Business Interruption Loan.

COVID-19 Update 20-03-2020

Chancellor has just finished speaking and...

-Government will pay 80% of wages for company employees who are not working, up to £2,500 a month.

-No VAT payments until after June.

-Payment on account tax payments due on 31 July 2020 deferred until 31 Jan 2021.

Will be reading the full details when published, and be updating our clients with a full overview ASAP.

In the interim if you have any queries or concerns please don't hesitate to drop me a line.

Best wishes,

Steve

Steven Hillman
Chartered Accountant

Coronavirus (COVID-19) - An update for all of our clients

In light of the ever-changing situation around Covid-19 Coronavirus, I wanted to share with you what support and help there is available. Apologies for the general nature of this message but I wanted to get something out ASAP. I am available for you on an individual basis so please don’t hesitate to get in touch.