Job Retention Scheme
One of the key measures announced by the Government to support employers was the Coronavirus Job Retention Scheme, which originally allowed UK employers to access a financial subsidy worth 80% of their workers’ wage costs, up to a cap of £2,500 per worker per month. Employers would need to class their employees as ‘furloughed workers’ to be eligible for this scheme.
A ‘furloughed worker’ is essentially a non-working employee who is retained on an employer’s payroll, rather than being laid off.
There is nothing preventing a director from being furloughed but they must not undertake employee work when furloughed and they must be paid a salary through the PAYE system.
Initially due to run until the end of July, the scheme was extended until the end of October with reduced levels of subsidy, and changes were introduced to support staff furloughed on a part-time basis, including directors.
The scheme has now been further extended until 31st March 2021. The level of support will also return to the levels seen previously, so the grants for November 2020 to January 2021 will be worth 80% of worker’s wage costs, up to a cap of £2,500 per worker per month. The level of grant for February and March 2021 is yet to be determined.
Due to the complexities around this area we have provided more detailed advice and a range of helpful FAQs in our article here
Enhanced SSP for COVID-19
If a director is off sick due to COVID-19 they can claim Statutory Sick Pay (SSP) as with any employee. Among its package to help employers, the Government introduced legislation to allow employers to reclaim SSP relating to employee absences as a result of COVID-19. This refund covers up to 14 days’ SSP per eligible employee. The current rate of SSP from 6th April £95.85 per week, which can be paid from the first day of absence.
Deferring tax payments
Any payments on account towards Income Tax for the 2019/20 tax year, which would have been due for payment by the end of July 2020, have been deferred until the end of January 2021. This is an automatic process and does not need to be applied for.
Further, on 24th September 2020, the Government announced that taxpayers with up to £30,000 of Self-Assessment 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. This means that Self-Assessment liabilities due in July 2020 will not need to be paid in full until January 2022.
Any Self-Assessment taxpayer not able to pay their tax bill on time, including those who cannot use the online service, can continue to use HMRC’s Time to Pay Self-Assessment helpline to agree a payment plan. They also have a dedicated helpline –0800 024 1222 – with increased staff numbers, to help those who are concerned about being able to pay their tax due to coronavirus.
Off-payroll working in the private sector (IR35)
The Government has deferred new rules affecting contractors working for the private sector, directly or through an agency, that were set to be introduced on 6th April 2020. The rules have been pushed back to 6th April 2021.
Plans have been announced to amend the insolvency rules to give companies in difficulty some breathing space so they can continue to trade, and employ staff, while considering their options for rescue.
The changes will mean that while companies are making arrangements to restructure, in order to facilitate a rescue, they will be able to continue to buy necessary supplies such as materials, energy and broadband, and at the same time, binding their creditors into their plans for rescue.
The wrongful trading provisions will be temporarily suspended as part of the changes to the rules, and this will apply retrospectively from 1st March 2020, and will initially apply until 31st May 2020, so that directors can keep their businesses running without the threat of personal liability. Without this relaxation, company directors could become personally liable for business debts if they continue to trade when they are uncertain about whether they are able to meet those debts.
Existing rules for fraudulent trading and the threat of disqualification will continue to deter directors against misconduct.
The legislation required to introduce these changes will enter through parliament at the earliest opportunity, and the provisions are anticipated to give the option to extend the relaxation beyond the three months currently planned.
How we can help
Individual circumstances will vary and we recommend speaking to a member of our team to understand how the information above applies to you. To arrange a telephone or video consultation, call us today on 0800 0523 555.
For our latest COVID-19 news and guidance for your business, visit our dedicated Coronavirus Hub.
We will be updating it regularly as we continue to monitor and digest all the latest information
Last updated: 5th November 2020This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.