Coronavirus update 10 – 4 June 2020
Grant claim deadlines and extension of SEISS and CJRS
The Chancellor made a number of significant announcements on the extensions to the Coronavirus Job Retention Scheme (CJRS) and the Self Employed Income Support Scheme (SEISS) last Friday, and these are detailed below. But firstly there are also now deadlines in place to make claims or to take action, so I detail these first.
DEADLINES FOR CLAIMS AND ACTION
7 June Discretionary grant claims have to be lodged with Tunbridge Wells Borough Council.
8 June Discretionary grant claims have to be lodged with Maidstone Borough Council.
10 June Discretionary grant claims have to be lodged with Tonbridge & Malling Borough Council.
10 June If you wish to furlough an employee who has not been furloughed before, then this is the last
date on which they can start their first period of furlough.
17 June Discretionary grant claims have to be lodged with Ashford Borough Council.
22 June Discretionary grant claims have to be lodged with Folkestone & Hythe District Council.
13 July Last date on which claims for the first SEISS grants can be made.
SEISS – IT HAS BEEN EXTENDED!
Contrary to what I said in our last newsletter, the self-employed will be entitled to make a second claim under the scheme. The claim process will be opened in August, and apart from a reduction in the grant value, the rules should be identical to the original scheme. The only change is that the grant will be reduced to 70% of average quarterly earnings, rather than 80%. The maximum grant will be £6,570, compared to £7,500 for the first claim. Hence, those who qualify will receive 87.5% of what they received the first time.
If you have not yet claimed your first grant, please do so as soon as you can. Ultimately claims for the first grant must be made by 13 July, and remember that we cannot do this for you. Indeed, we have no mechanism of knowing whether you have made a claim, so I am afraid that the responsibility for making a claim must entirely rest with those traders who are eligible. See newsletter 8 for full details of how to claim - https://www.busbys.co.uk/Coronavirus_Update_8/ - the process is very straightforward.
EXTENDED SUPPORT FOR EMPLOYERS - CJRS
We now have some further details on the extension of the CJRS. Changes are now going to be made on a month by month basis as follows:
June – The scheme is going to be closed to “new entrants” from the end of this month. And any newly furloughed employees will need to have completed their initial minimum three week furlough period by 30 June. So if you are planning to furlough an employee at some point in the future, they must have been furloughed at some point on or before 10 June. For example, if you have been operating a rota of employees taking turns to be on furlough, make sure that they do start their first furlough period within the next 6 days.
Otherwise, the rules for June are the same as for earlier months, and the upper cap remains at £2,500 per month plus employer’s NI and pension costs.
July – Flexible working for furloughed employees starts on 1 July. Details of how this will work in practice are rather sketchy at present, but we think that employers will have to pay employees directly for hours worked, and then CJRS will make up the balance to a maximum of 80% of the normal salary.
For a simple example of how this will work, see Newsletter 11
Otherwise the rules for July are unchanged from June.
August – The above arrangements will continue, but the employer will no longer be able to claim any of the employer’s NI or pension costs through the CJRS. For many employers, this will not make a vast difference, particularly if they have few employees (e.g. director only companies) or their employees are on relatively low pay. For many, it will be worth starting to claim the Employment Allowance (worth up to £4,000 per annum) which may cover the NI costs in any case.
The maximum monthly gross pay claim under CJRS will remain at £2,500 per employee, and 80% of gross pay can still be recovered. For employees still on furlough, there will be no requirement to pay them more than you can recover through CJRS.
September – it is only from 1 September that employers will have to start funding some of the employees’ gross pay. There will still be an obligation to pay furloughed employees a minimum of 80% of their normal gross salary, but employers will only be able to reclaim 70% of gross pay via CJRS. So that brings the maximum claim down from £2,500 to £2,187.50 per month.
October – and finally, in the last month of the scheme, employers will only be able to reclaim 60% of gross pay costs, bringing the maximum monthly claim down to £1,875. Employees who are still fully furloughed at that point will still be entitled to 80% of their normal pay. The scheme will then end on 31 October.
Of course, the government are hoping that this gradual reduction in support will be mirrored by growth in activity. Whether all businesses can get back to full productivity by 31 October is a moot point, but it has to be said that the scheme is still very generous, and will hopefully allow many businesses to get back on their feet. The flexibility that has been introduced from 1 July to support part time work is going to be very welcome for those businesses who cannot open until after that date.
If we maintain your payroll, it is going to be essential for you to keep us informed of the changes that you make, as you bring back staff, whether full time or part time. Please do endeavour to give Nikki all of the details correctly before she runs the payroll!
Whilst these were primarily designed to support businesses that do not pay rates, but do have fixed property costs (see our Newsletter 8 - https://www.busbys.co.uk/Coronavirus_Update_8/) it has been speculated that businesses that are run from home might also qualify. We are not yet aware of a successful claim being made for home office costs, but if these are reasonably substantial (e.g. more than £1,000 per annum), then we see no harm in trying to apply. But do be aware that you may need to provide quite a lot of supporting information and detail.
So the types of business that could benefit will either pay the director/shareholders rent, or the business will claim a deduction for use of home as office – check your accounts to see what has been claimed in the past. If in doubt, check with us. We would suggest that the use of home should be rather more substantial than just having an office in a bedroom, but there is no guidance on this.
Applications must be made to your local council. There is a lot of variety in time frames, and some councils are far more advanced with this than others. So for local examples:
If you have any questions, please do email your regular contact or at firstname.lastname@example.org