Support for businesses and individuals
Last updated: 4 March 2021
The Government has announced a number of measures to support individuals and businesses. The following information provides a summary of the measures, along with some comments and links to more information. Some of these measures apply automatically, while others require you to take action.
We remain on hand to help you obtain the support you need. We understand the unique pressures and challenges businesses and individuals are facing at this time and the importance of getting access to the help available. If you need specific advice, please email us: email@example.com
Job Retention Scheme (EXTENDED TO 30 SEPT 2021)
The Job Retention Bonus
As the Job Retention Scheme has been extended, the Job Retention Bonus will no longer be paid in February 2021.
We will continue to assist all payroll clients with the JRS. If you normally run your own payroll we can engage separately to help with any aspect of the scheme.
March 2021 Update
On 3rd March 2021, the government announced that the CJRS would be extended until 30 September 2021. Support will continue at the same level until the end of June. To reflect the fact that lockdown restrictions will be easing, the level of support reduces from July with employers being asked to contribute towards the cost of unworked hours. Employers are being asked to contribute 10% for July and 20% for August and September claims. The employee will continue to receive at least 80% of their current salary for hours not worked.
The government also announced that it is investing over £100m in a Taxpayer Protection Taskforce in order to combat fraud relating to Covid-19 support, particularly the CJRS, SEISS and Bounce Back Loan Scheme.
December 2020 Update
On 17 December 2020, the government announced that the CJRS would be extended until 30 April 2021, with the government continuing to contribute 80% towards wages.
November 2020 Update
On 5 November 2020, the government announced that the CJRS would be extended until 31 March 2021. Full guidance will be published on 10 November 2020.
For claim periods between 1 November 2020 and 31 January 2021 employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. The cap is proportional to hours not worked.
Employers will pay hours worked plus NIC and pension contributions.
The government will review the policy in January 2021 and may ask employers to contribute more.
HMRC will publish details of employers who make claims under the extended CJRS scheme, starting from December.
Claims can be made for employees who were on the PAYE payroll on 30 October 2020. The employer must have made an RTI submission to HMRC between 20 March 2020 and 30 October 2020 notifying earnings for that employee.
The scheme continues to be flexible, with employers able to furlough employees on a full or part time basis, on any shift pattern, and the employees can be on any type of employment contract.
Employees do not need to have been furloughed under the CJRS previously to be eligible under the extension.
Employees who were employed and on the payroll on 23 September 2020 who were then made redundant or stopped working for their employer can be re-employed and claimed for. The employer must have made a PAYE RTI submission to HMRC from 20 March 2020 to 23 September 2020 notifying earnings for those employees.
The closing date for claims up to and including 31 October 2020 remains 30 November 2020.
Claims under the extended CJRS can be made from 8am on Wednesday 11 November 2020.
Claims relating to November 2020 must be made by 14 December 2020. Claims relating to each subsequent month should be submitted by day 14 of the following month.
June 2020 Update
The Government’s Job Retention Scheme has continued to evolve and we now know the rules that take us through to the end of the scheme on 31 October 2020.
We have summarised the changes below and will continue to provide dedicated support to enable you to benefit from this valuable resource. The scheme should now be considered in two parts, Phase 1 and Phase 2.
The End of Phase 1
Phase 1 of the scheme ended on 30 June 2020. The deadline for submitting claims relating to Phase 1 was 31 July 2020. Any periods straddling June/July were treated as ending on 30 June and restarting on 1 July, with separate claims being required.
Further monthly changes outlined below mean that claims are no longer able to straddle month ends, with separate claims being required.
Phase 1 claims had to have be made before Phase 2 claims and, save for some limited exceptions, the number of employees included in a Phase 2 claim cannot exceed the highest number of employees included in any Phase 1 claim. Generally, an employee can only be furloughed under the scheme from 1 July if they were furloughed for a full 3 week period prior to 30 June.
Employees returning from maternity or paternity leave will be eligible for furlough in Phase 2 despite not being furloughed in Phase 1, provided that they were employed on or before 19 March 2020 and other employees in the business were furloughed in Phase 1.
Phase 2 Changes – Flexible Furlough
Up to 30 June 2020, employers had to elect whether to furlough someone completely or not at all. This changed from 1 July 2020 with the introduction of Flexible Furlough.
This allows employers to bring employees back to work on a part time basis.
Costs for the balance of hours not worked, compared to the employee’s normal working arrangements, can be claimed under the scheme, subject to the prevailing limits on the quantity of the claim.
Employers will have to report the worked hours and usual hours as part of the claim and we would ask that you record this information carefully in order that you can provide our team with the necessary details. For salaried employees, we may be unaware of the usual contracted hours.
We cannot over emphasise the importance of good record keeping in this regard. Not only is this vital to ensure the correct payments and claims are made, but also to ensure you can answer any future enquiries from your employees or HMRC.
You must agree any new Flexible Furloughing arrangements in writing with your employee.
When an employee is on Flexible Furlough, the employer must still adhere to the rules of furlough for the portion of time that the employee is furloughed, which includes not asking them to carry out any work. Any work the employee does must be carried out in the portion of time that the employee is active and being paid by the employer.
Compliance with the National Minimum Wage legislation will be an important consideration for employees on Flexible Furlough and employers will need to ensure that they are paid at least the minimum wage for each hour of work and training.
Note that for an employee to be eligible for flexible furlough, they must have completed at least a 3 week furlough period prior to 30 June.
Phase 2 Changes – Reduction in Support
As we move towards the end of the scheme on 31 October 2020, the level of support being provided gradually reduces. The start of each month sees the reduction of support as follows:
From 1 August: Employers are no longer able to claim for the cost of Employer’s National Insurance or Pension contributions.
From 1 September: The limit for claiming gross wages reduces from 80% (up to £2,500 per month), to 70% (up to £2,187 per month).
From 1 October: The limit for claiming gross wages will reduce further to 60% (up to £1,875 per month).
Although the amount employers can claim reduces in September and October, employers will be obliged to top up the wages of furloughed employees so that the gross wage remains at 80% (up to £2,500 per month). This is a significant change to the scheme, which previously allowed employers to choose whether to top wages up above the level they are able to claim under the scheme.
These changes mean that from 1 August employers will incur actual costs in respect of furloughed employees.
The Original Scheme
Under the Coronavirus Job Retention Scheme, a UK employer is able to reclaim from the Government part of the cost of paying the salary of an employee that would otherwise have been laid off. The amount to be reimbursed was initially equal to 80% of the employee’s salary subject to a cap of £2,500 per month, plus associated Employer’s National Insurance and the minimum pension contribution.
To qualify for the support, the employer designated the employee as a ‘furloughed worker’ and provided information about the worker to HMRC through a new online service.
Legal advice should be taken if you intend to designate workers as being “furloughed” as it will likely be a change to their employment contract. As part of the negotiation, employers may or may not offer to make up the difference in wages. A furloughed worker is not able to undertake any work for the employer during the period they are designated as such.
The scheme also allows you to reverse any redundancy decision taken since 28 February by re-engaging the employee and placing them on furlough.
Employees that are furloughed have continuous employment rights.
There is no barrier to Directors’ salaries being included in the scheme. The scheme is however limited to PAYE and there is no provision for dividends.
This is potentially one of the most valuable measures for employers and employees alike and serious consideration should be given to implementing the scheme in your business if you have suffered a downturn in trade.
Self-Employment Income Support Scheme
This scheme provides taxable grants for sole traders and members of Partnerships who have profits below £50,000.
Each grant is paid in a single instalment. Applications for the first four grants are now closed. The online service for the fifth grant is now open.
Grants one to three are taxable in the 2020/21 year. Grants four and five are taxable in the 2021/22 year.
The main conditions for eligibility for the grant continue to be:
- Trading profits of no more than £50,000 based on 2019/20 figures
- Where not eligible for 2019/20, profits of prior tax years back to 2016/17 can be considered
- The individual must have traded in both 2019/20 and 2020/21
- The 2019/20 tax return must have been submitted to HMRC by midnight on 2 March 2021
- There must be reduced trading (or temporarily not trading) as a result of Covid-19
- There must be a reasonable expectation that there will be a significant reduction in trading profits
- There must be an intention to continue to trade
For the fifth and final grant, which covers the period to the end of September 2021, the calculation will also take into account the reduction in turnover in the year April 2020 to April 2021. The grants will be:
- 80% of three months average trading profits capped at £7,500 where turnover has reduced by 30% or more
- 30% of three months average trading profits capped at £2,850 where turnover has reduced by less than 30%
Please note that individuals who own their own company are not classed as self-employed.
VAT & Income Tax Payment Deferral
On 24 September 2020, the government announced a New Payment scheme for deferred VAT. This gives businesses who deferred VAT payments due between March 2020 and June 2020 the option to spread their payments over 11 equal instalments in 2021/22.
All businesses which took part in the deferral are eligible, but the key difference from the original deferral is that you must opt-in to the New Payment Scheme. HMRC will put the opt-in process in place early 2021.
The government also announced Enhanced Time to Pay for Self Assessment taxpayers. This is to give taxpayers more time to pay taxes due in January 2021.
Taxpayers with up to £30,000 of liabilities due will be able to use HMRC’s self service Time to Pay facility to secure a plan to pay over an additional 12 months with other taxpayers able to use HMRC’s helpline to agree a plan.
We will assist all self assessment clients in making Time to Pay arrangements with HMRC.
The Original Deferral
These deferrals were automatic and no action was required to take advantage of them.
For all businesses, HMRC deferred any VAT due between March 2020 and 30 June 2020 until 31 March 2021.
Similarly, self-assessment taxpayers who were due to make a second payment on account for the 2019/20 tax year by 31 July 2020 had until 31 January 2021 to make the payment with no interest being charged. This deferment was automatically available and no application was required.
VAT: REDUCED RATE (FROM 15 July 2020)
VAT registered businesses can temporarily apply a reduced rate of 5% VAT to certain supplies relating to hospitality, hotel and holiday accommodation, and admission to certain attractions.
The original measure saw the temporary reduced rate apply to supplies made between 15 July 2020 and 12 January 2021.
The government has subsequently announced extensions and the reduced rate will now apply until 30 September 2021. From 1 October 2021 until 31 March 2022 an interim VAT rate of 12.5% will apply.
Business Support Lines
HMRC have re-opened their facility to arrange payment plans for all taxes and can arrange instalment plans over the phone that will prevent penalties and recovery action. We expect HMRC to be more accommodating to requests than they normally would be. The number has been changed to 0800 024 1222 to cope with increased demand.
Non Domestic Rates Relief
All non-domestic properties in Scotland will get a 1.6% rates relief from 1 April 2020 to 31 March 2021. For retail, hospitality and leisure businesses the relief will be 100%, if the property is occupied or has been closed temporarily due to Covid-19. In both cases, the relief will be automatically applied by your local council.
The Scottish Business Support Fund (Closed 10 July 2020)
Established to mirror the relief announced by the Chancellor to apply in England, Scottish Businesses subject to non-domestic rates could apply to their local authority for a grant.
There were 2 types of grant available; £10,000 for ratepayers of small businesses and £25,000 for qualifying retail, leisure and hospitality businesses.
This scheme closed to new applications on 10 July 2020.
Business Interruption Loans
On 24 September 2020, the government announced that both CBILS and BBLS will be extended until 30 November 2020, then on 5 November 2020 a further extension until 31 January 2021 was announced. On 17 December 2020 an additional extension was announced allowing applications to be made until 31 March 2021.
In addition, the government intends to allow lenders to extend the loan term for CBILS from 6 years to 10 years and to extend the loan term for BBLS to 10 years under the new Pay as you Grow scheme.
On 3 March 2021, a new Recovery Loan Scheme was announced to ensure business can continue to access loans and finance once the existing Covid-19 loan schemes close.
Coronavirus Business Interruption Loan (CBILS)
A small business is able to obtain a loan through the Coronavirus Business Interruption Loan Scheme of up to £5m. The loans are 80% guaranteed by the government and the government will meet the cost of the first twelve months of interest charges and any fees imposed by the lender.
To qualify for the scheme, the business must be UK based and have turnover of less than £45m.
Although Government backed, these loans are made by mainstream lenders.
The government intends to allow lenders to extend the loan term for CBILS from 6 years to 10 years.
Bounce Back Loan Scheme (BBLS)
Small and medium sized business can borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000.
The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. No repayments are due during the first 12 months. After 12 months the interest rate will be 2.5% a year.
These loans are also made by mainstream lenders.
Additional measures for BBLS loans were announced on 24 September 2020:
- Under the new Pay as You Grow scheme, the government will give businesses up to 10 years to repay their BBLS loan
- There will be an option to move temporarily to interest only payments for periods of up to six months
- This option can be used up to three times
- Alternatively, repayments can be paused entirely for up to six months
- This option can only be used once and only after having made six payments
Recovery Loan Scheme
The new loan scheme will be open to all businesses, including those who have already received support under the existing Covid-19 guaranteed loan schemes. The government will provide an 80% guarantee on eligible loans of between £25,000 and £10m.
The scheme launches on 6 April 2021 and is open until 31 December 2021, subject to review. Further details on how to apply and details of accredited lenders will be released in due course.
Statutory Sick Pay (SSP)
UK businesses with fewer than 250 employees across all PAYE schemes can reclaim SSP paid to employees for up to 2 weeks where the employee is absent due to:
- having coronavirus symptoms
- having to self-isolate
No proof of symptoms or diagnosis is required.
Your PAYE scheme must have been created and started on or before 28 February 2020.
You must have paid your employee’s sick pay before you can claim it back. The claim is made online. If we are authorised to do PAYE online for you, we will be able to make the claim on your behalf.
If you’re claiming for wage costs through Job Retention Scheme, you can claim back SSP for the same employee but not for the same period of time.
Lenders have agreed to accommodate 3 month mortgage holidays for individuals struggling to keep up repayments. This will result in a small increase to your monthly payments after this time.
Applications should be made directly to your lender, making reference to the Coronavirus initiative.
Payment holidays are also available on buy-to-let mortgages where the tenant is unable to pay the rent. Again, lenders should be approached directly.
Following government announcements, the FCA is proposing an extension to this support.
This is in addition to the measures introduced by the Government.
Many healthy businesses will be put under severe pressure in the coming months. We can provide advice and help you take action to protect the assets you have worked hard to build up in your business and ensure that your exposure at this time is limited as much as possible.
PRS Landlord Loan
The Private Residential Landlord (non-business) Covid-19 Loan is intended to provide short-term support for landlords where tenants are having difficulty paying rent as a result of the impacts of Covid-19.
The interest free loan is available for PRS landlords who:
- were, or had applied to become, registered before 1 February 2020
- are not classified as businesses
- have 5 or less properties available for rent
- properties available for rent are classed as being within the private rented sector (as per the terms of the 2006 Housing Scotland Act)
- have lost rental income as a result of tenants facing difficulty in paying rent as a result of the Covid-19 situation or where a rental property became vacant on or after 1 February 2020 and the landlord is unable to get a new tenant because of the restrictions in place