May Newsletter

May Newsletter

NEW “FURLOUGH” SYSTEM FOR EMPLOYEE WAGES UP AND RUNNING

 The Coronavirus Job Retention Scheme (CJRS) claims portal opened on Monday 20 April and early indications are that it seems to be working smoothly but with a few teething problems as you would expect from a brand-new system.

 In the run up to the start of the system there was limited detail from HMRC on what could be claimed as the initial guidance was rather sketchy and did not cover all situations. The government also decided late on to change the qualifying conditions so that it would apply to those on the payroll at 19 March instead of 28 February to cover those employees taken on in March, or so we thought. It turned out that the employee needed to be included in an RTI (real time information) submission for 2019/20 by 19 March to be included.

 Remember that CJRS allows employers to claim 80% of an employee’s regular pay subject to a limit of £2,500 a month if they have been “furloughed”, in other words unable to work during the crisis.

 The claim can also include employer’s NIC and the employers 3% auto-enrolled pension contribution on the restricted amount.

 Note that company directors may be furloughed provided they do not work for the company other than complying with their statutory obligations. The furlough claim only applies to their salary, not dividends.

 Depending on how long the Coronavirus lockdown lasts future claims should be a lot more straightforward now that we have more detailed guidance from HMRC. As usual if we can be of assistance please get in touch.

 

MORE DETAILS ON SELF-EMPLOYED GRANT SCHEME

Like the CJRS scheme for employers the initial HMRC guidance on the grant scheme to support the self-employed and members in partnerships was also very sketchy.

 In outline the Self-Employed Income Support Scheme (SEISS) allows the self-employed to claim 80% of their average profits for the period up to 2018/19, limited to £2,500 a month, initially for a three-month period.

Like CJRS there are lots of conditions that need to be satisfied such as being self-employed in 2018/19 and continuing to trade in 2019/20 and 2020/21, or would be doing so if it the business had not been impacted by coronavirus.

In order to be able to make a successful claim the self-employed profits in 2018/19 must not exceed £50,000 and must be more than 50% of the individual’s total income. If that test is not met, then the same £50,000 and 50% tests are applied to average profits and total income over the three years (or shorter period) to 5 April 2019.

HMRC updated their guidance 4 May to outline the process for applying for SEISS. Full details:  https://www.gov.uk/guidance/claim-a-grant-through-the-coronavirus-covid-19-self-employment-income-support-scheme

Please contact us if you need help with your claim

 Self-Employed Profits

HMRC guidance has defined self-employed profits for the purposes of SEISS as turnover for the business less allowable business expenses and capital expenditure. This figure may not be the same figure as that originally declared in your self- assessment tax returns. If the calculation results in a trading loss the amount that is averaged is not nil for that year but the negative result.

 Total income

HMRC state that total income for the purposes of the 50% test would be taxable income from all sources for the relevant year such as property income, bank interest, employment income and social security income. There are still several unknowns but at least we now have bit more clarity. Unlike the furlough scheme mentioned earlier the self-employed can continue trading, albeit at a reduced level. We understand that HMRC will open the SEISS claims portal in early May and the grants will be paid to self-employed individuals in early June 2020.

 

DIARY OF MAIN TAX EVENTS

MAY/JUNE 2020

Date

What’s Due

 

01/05

Corporation tax payment for year to 31/07/19 (unless quarterly instalments apply)

 

19/05

PAYE & NIC deductions, and CIS return and tax, for month to 5/05/20 (due 22/05 if you pay electronically)

01/06

Corporation tax payment for year to 31/08/19 (unless quarterly instalments apply)

 

19/06

PAYE & NIC deductions, and CIS return and tax, for month to 5/06/20 (due 22/06 if you pay electronically)

 Managing Your Wellbeing

How to manage your personal wellbeing during the Coronavirus Lockdown.

Stay connected

Having a sense of connection with family and friends is important for our mental health. Ensure you schedule calls or video chats with your family and friends during lockdown. In addition, there are many online book clubs, virtual coffee groups and online workout challenge groups that you can join in order to avoid feeling isolated.

Routine is your friend

If you have the space in your home to have a dedicated work area, try to use that part of your home for work and keep the rest of your home for family time/non-work time. The physical separation of your work area and non-work area helps you to create head space and can help you to avoid being over worked and becoming stressed.It can be easy to fall into bad habits. Set out a routine that clearly distinguishes between work time and home time/family time. For example, try to sit down at your desk for work between 9am and 6pm. Schedule regular breaks and a lunch hour, just like you would at the office. Schedule dinner for around 6pm so that you have a hard stop at the end of your day. You should also reward yourself with some family activity time or hobby time, at say, 7pm, etc.            

 Keep yourself active

Lockdown means you cannot go to the gym or a public swimming pool but it is important to stay active. Commit to a regular exercise routine and choose one or two activities that you like and that suit your physical capabilities. There are lots of free resources available online including exercise classes, Yoga, Pilates or tai chi lessons that you can follow. It is also important to keep your mind active by reading books, eBooks or the news (but perhaps limit the amount of Coronavirus -related news that you consume).

 Focus on positivity

People across the entire world are dealing with uncertainty at the moment. There is no point focusing on the things that you cannot control. We can all control how we communicate and that can provide a sense of positivity during these uncertain times. Focus on the positive and talk about what you can do rather than what you can’t do. If you maintain a positive outlook, you will tend to feel more positive, more of the time. This will also tend to have a positive impact on those around you and those that you interact with.