PWA Tax Update (6th November 2020) -latest rules on CJRS SEISS

PWA TAX UPDATE

JOB SUPPORT SCHEME

The Chancellor has now cancelled the Job Support Scheme before it even started.

It has been replaced with the Coronavirus Job Retention Scheme which has now been extended to cover the period from 1 November 2020 to 31 March 2021.

 

EXTENDED CORONAVIRUS JOB RETENTION SCHEME (CJRS)

For the period from 1 November 2020 to 31 January 2021, the extension to the scheme will pay a grant to employers to enable them to pay employees 80% of their salary (capped at £2,500).

The employer will remain liable to the employer’s NI and pension costs.

There is an unanswered question as to what the reference salary for the 80% calculation will be. Under the previous scheme this was the salary from the February 2020 payroll, however this new scheme may use salary from a later month.

The government has said that they will review in January the amount payable by the employer from 1 February 2021 onwards.

The impression from this that there may be a phased withdrawal of the scheme, with the employer making contributions in February and March 2021, as was the case in September and October 2020 where employer contributions of 10% and 20% were introduced.

As with the earlier announcement:

 

  • There is no requirement for employers to have previously furloughed employees they now want to include in the scheme;
  • Employees who were previously excluded as they were not included in a payroll Real Time Information (RTI) submission before 19 March 2020 can now be included in the scheme provided they were included in a payroll RTI submission at some point between 19 March 2020 and 30 October 2020.

 

In practice this should mean all employees included on a payroll in September 2020 will be eligible and, provided the RTI submission for the October payroll was made on or before 30 October, new employees who started in that month will also be eligible.

 

  • Employees that were included in an RTI submission on or before 23 September 2020 who were made redundant or stopped working afterwards can be re-employed and claimed for under this scheme.
  • Employers claiming under this extended Coronavirus Job Retention Scheme will have their details published from December 2020 onwards so it will be public knowledge that they have relied on this scheme. The motivation behind HMRC doing this is likely to be to allow employees to be aware that their employer has made a claim which may not have been paid to the employee.

Claims can be made from Wednesday 11 November (in advance of the November payroll) and claims for each month must be submitted by the 14th day of the following month. If this deadline is missed, it looks like the opportunity to make the claim for that month is lost.

 

JOB RETENTION BONUS

The Job Retention Bonus, due to be paid in February 2021 at a rate of £1,000 per employee has been scrapped. The press release from government says, “we will redeploy a retention incentive at the appropriate time.”

 

SELF EMPLOYED

This has been enhanced with the Self-Employed Income Support Scheme due to be available for the three months ended 31 January 2021 has now been increased to cover 80% of profits, capped at £7,500.

You can claim this grant from the 30 November with payment promised in good time for Christmas.

A further payment for the period from February to April 2021 is due to be available, although the level of this payment is still to be announced..

Please note that as far as we are aware the government is using the same criteria for this scheme as before which means you MUST have filed a tax return for 2018/19 and your self employed profits are less than £50,000 and your self employed profits are more than 50% of your total declared income.

If you started self employed after the 5th April 2019 you cannot claim this grant.

All you can claim is Universal Credit.

 

BUSINESS GRANTS

On the 2nd November, the government announced the following financial help for businesses and individuals to coincide with a new lockdown for England starting on 5 November.

Businesses required to close in England due to local or national restrictions will be eligible for the following:

  1. For properties with a rateable value of £15k or under, grants to be £1,334 per month, or £667 per two weeks;
  2. For properties with a rateable value of between £15k-£51k grants to be £2,000 per month, or £1,000 per two weeks;
  3. For properties with a rateable value of £51k or over grants to be £3,000 per month, or £1,500 per two weeks.
  4. The government is also providing additional funding for councils to run local grant support schemes, say, for closed businesses that do not have a rateable value.
  5. Businesses with more than one qualifying property will receive more than one grant.

 

Government-funded grants for businesses required to close during the lockdown will distributed by the city council.

The implementation arrangements are still being finalised. 

 

A single grant to cover the four-week period will be paid to each eligible business.