These are things we have found out about support options announced already plus some new announcements, there may still be changes as scheme practicalities develop.
Self-employed income support scheme:
- HMRC are aiming to contact those people who HMRC think are entitled to this support by mid-May.
- Payments to be made in early June.
Who can claim?
- You can claim if you’re a self-employed individual or a member of a partnership and you:
- have submitted your Self-Assessment tax return for the tax year 2018 to 2019
- traded in the tax year 2019 to 2020
- are trading when you apply, or would be except for coronavirus
- intend to continue to trade in the tax year 2020 to 2021
- have lost trading profits due to coronavirus
- Your trading profits must also be no more than £50,000 and more than half of your total income for either:
- the tax year 2018 to 2019
- the average of the tax years 2016 to 2017, 2017 to 2018, and 2018 to 2019
What will you get?
- You’ll get a taxable grant based on your average trading profit over the 3 tax years:
- 2016 to 2017
- 2017 to 2018
- 2018 to 2019
- If you have been self-employed for less than 3 years, then the average will be taken over the period you have been trading.
- Government will pay the lower of 80% of the average or £2,500 per month.
- The payment will be subject to income tax and national insurance.
- Any employee who was employed on the 19th March 2020 and HMRC had been informed of the fact by RTI on or before 19th March 2020 can be included in furlough. As HMRC only know of a joiner when a payrun has occurred this is likely affect only weekly and fortnightly paid employees who started in March rather than monthly paid employees.
- Furlough support will now continue until end of June (was end of May).
Recap of Furlough key points
- Government paid furlough will cover 80% of an employee ‘usual’ pay (see below) or £2,500 whichever is lower.
- Government will also cover employers’ NI on the above amount as well as the basic employers’ pension contribution.
- The employer can top up the employees’ salary to above 80% should they wish.
- The employee will pay the usual income tax and employees’ national insurance on the furlough payment.
- HMRC online portal is due to go live on April 20th.
- All claims must be made through the portal.
- Details required for each furlough employee:
- NI number
- Salary furloughed
- Employers NI on salary furloughed
- Pension on salary furloughed
- Claim period
- You will need your PAYE scheme activated on your Government Gateway account, if you don’t have a Government Gateway login apply immediately as this can take 10 days to set up.
- Make one claim per payrun.
- Claims can be made 14 days ahead of the paydate.
- Apprentices can be furloughed and training can continue under furlough.
- Employees cannot do any work for the company whilst on furlough.
- Employees can work elsewhere without affecting their furlough entitlement even if the hours they are working overlap those of their furloughed employment.
- If this is contractual rather than discretionary, commission can be included in furloughed pay.
- Tips cannot be include in furloughed pay.
- As long as the minimum period of 3 weeks is observed for a furlough employee then employees can be rotated for furlough e.g. 3 weeks on 3weeks off.
- HMRC hope to pay claims within 4 to 6 working days.
- Your furlough agreement with the employee must be retained for 5 years even though payroll records only need to be kept for 4 years. Sample furlough agreement can be found at http://www.chariothouse.co.uk/newsletters/covid-19-furlough-example-letter/
- Furlough receipts from government will be subject to corporation or income tax in accordance with normal principles.
- Full time or part time employees 80% of the pay as in last pay period to 19th March 2020.
- Variable pay, eg seasonal, higher of same month last year or average earnings in tax year 2019/2020.
- For employees returning from statutory leave eg Maternity leave, the furlough amount should be based on normal pay received during the statutory leave period.
Auto Enrolment Pension
- Auto enrolment pension liabilities are still due to be paid.
- If you think you may have problem making the payment due date for the pension you should contact your provider to if there is any flexibility in the payment date.