Help for employers affected by coronavirus
The Government’s Coronavirus Job Retention Scheme was due to end on 31st October, what help is available for employers going forward? Our guide below outlines what help is available if you are an employer who has been affected by Coronavirus.
The Coronavirus Job Retention Scheme
The Coronavirus Job Retention scheme (CJRS) has now been extended and employers adversely affected by the pandemic can continue to claim from 1st November 2020 until 31st January 2021. The Government aims to continue support to employers but only where there is ‘viable employment’. This means that an employee needs to return to work for a minimum of 33% of their usual hours.
In September 2020 the Chancellor, Rishi Sunak, announced details of the employee Job Support Scheme (JSS) but this has since been updated.
Like all coronavirus grants, the CJRS will continue to be taxable as the employer’s income.
How does the CJRS work?
- The employer must pay the employee as normal for the hours they work
- For every hour not worked, the Government will contribute 80% of the employee’s usual pay.
- This is capped at a maximum of £2,500 per employee per month
- Employees must have been on the employer’s PAYE payroll on or before 30 October 2020
- The employers contribution will be reviewed in January following the Government’s review the economy
Who is eligible?
- All employers are eligible for the CJRS as long as they have a UK bank account and a Pay-As-You-Earn (PAYE) scheme
- It is not necessary to have previously made a claim under the CJRS
- Small and Medium-sized Enterprises (SMEs) can take advantage of the scheme
- Large businesses can only claim if they can show that their turnover is reduced due to COVID-19
- Employees must be on an employer’s PAYE payroll on or before 30 October 2020
- Real-Time Information (RTI) submissions notifying employee payments to HMRC must have been made on or before 23 September 2020
- Employees must not already be on notice of redundancy
How is the CJRS calculated?
- The employer pays the employee their usual contracted wages for actual hours worked
- For each hour not worked, the government will pay 80% the usual hourly wage for that employee
- The CJRS grant will be capped at £2,500 a month for each employee
- The grant is in respect of Gross pay and will not cover Class 1 employer NICs or auto-enrolment pension contributions. These will have to be paid by the employer
- ‘Usual wages’ will follow a similar calculation methodology as for the previous CJRS
- Employees who have previously been furloughed under the CJRS will have their underlying usual pay and/or hours used to calculate usual wages and not the amount they were paid whilst on furlough.
What about the Job Retention Bonus?
This bonus was planned a one-off grant to employers of £1,000 per employee brought back to work from being furloughed. However as employers will be able to claim support through to January 2021, the payment will not be available in February 2021 as planned.
We are waiting for further support as the Government continues to review the support to employers.
An further extension to the Self-Employment Income Support Scheme (SEISS) has been announced. This provides for two additional taxable grants payable to self-employed businesses.
Self-employed individuals who are currently eligible for the SEISS will be able to claim if they continue to actively trade. But only if they are facing reduced demand due to the coronavirus.
The first grant for the three months from 1 November 2020 to 31 January 2021 will be paid in a single instalment. It will be based on 80% of average monthly trading profits and will be capped at £7,500 in total.
Details of the second instalment (for the period from 1 February 2021 to 30 April 2021) will be provided when government has set the level for this second grant.
COVID-19: Time to Pay
HMRC’s ‘Time to Pay’ service may be used to claim support by businesses and self-employed taxpayers with outstanding tax liabilities. Under ‘Time to Pay’, taxpayers can set up a payment plan to spread the cost of their outstanding tax bill.
Self-employed taxpayers can ask for ‘Time to Pay’ if they owe £30,000 or less. However, they must not have any other payment plans or debts with HMRC. A ‘Time to Pay’ agreement for self-employed taxpayers can now be made online.
The individual can choose how much to pay straight away and how much to pay each month. Interest will be charged, but the rate of interest on underpaid tax has been reduced to 0.1% with effect from 30 March 2020 for quarterly instalment payments and 7 April 2020 for non-quarterly instalment payments.
Self-assessment taxpayers can also benefit from a separate, additional 12-month extension from HMRC on the ‘Time to Pay’ self-service facility. This means that deferred payments from July 2020 and those due in January 2021, will now not need to be paid until January 2022.
‘Time to Pay’ arrangements are normally agreed by HMRC on a case-by-case basis and tailored to individual circumstances and liabilities. HMRC have a dedicated helpline (0800 024 1222) specifically to deal with COVID-19 related time to pay requirements.
Time to Pay Arrangements: https://www.gov.uk/guidance/find-out-how-to-pay-a-debt-to-hmrc-with-a-time-to-pay-arrangement
Government Coronavirus Support: https://www.gov.uk/coronavirus/business-support
Coronavirus tax support Webchat service (Mon-Friday, 8am-4pm) https://www.tax.service.gov.uk/ask-hmrc/webchat/payment-problems