Furloughing (CJRS)– update and double checks
HMRC have confirmed that the existing scheme will continue until 31 July 2020.
As the rules were brought in quickly, here are a few reminders of some of the key points
- There should be a documented agreement with the employee in relation to them being furloughed (this needs to be retained for 5 years)
- Employees who are furloughed continue to have employment rights, rights to holidays on full pay and if you end their contracts, normal notice periods will apply.
- Employees MUST NOT work during the period when they are furloughed (directors are able to continue their statutory responsibilities but should not carry out any marketing or work that generates sales)
- Where you are making changes to an employees pay or working patterns etc or have to make redundancies, we recommend that you take HR or employment advice.
Flexible furloughing
From 1 July, flexible furloughing will be possible, so an employee/director can work part time and be furloughed in between work. Changes to employee terms should again be agreed and documented.
To qualify for CJRS grants after 1 July, an employee needs to have been furloughed by 10 June and needs to have been off for at least 3 weeks. For directors working on a part time basis, if the work can be weighted to the first week of June, with no marketing or sales work for the next three weeks, it would be possible to make future claims in the flexible furlough period.
Employers will need to report usual hours and hours worked, so we will need this with the payroll processing information and to make claims.
Employers will have to start to contribute to the furlough payments in phases as follows:
- July 2020 - CJRS claim covers furloughed wages (80% up to £2500), employers NI & pensions. Employer pays any top up.
- August 2020 - CJRS claim covers furloughed wages (80% up to £2500). Employer pays any top up and all employers NI & pensions.
- September 2020 - CJRS claim covers furloughed wages (70% up to £2187.50). Employer pays 10% (so the employee still gets 80% or normal salary) and any top up and all employers NI & pensions.
- October 2020 - CJRS claim covers furloughed wages (60% up to £1875). Employer pays 20% (so the employee still gets 80% or normal salary) and any top up and all employers NI & pensions.
Full details of how claims are calculated will be made available on 12 June 2020.
Additional Government Support
- Self-Employment Income Support Scheme (SEISS)
Support for the self employed has also been extended, those who were eligible in the first wave will be entitled to a second payment of 70% of profits capped at £6,570. - HMRC Support Finder
HMRC have created a tool to help you identify what support is available for your business. Click here to find out more. - The Coronavirus Business Interruption Loan Scheme
The Coronavirus Business Interruption Loan Scheme is available if you can demonstrate that your business would be viable were it not for the pandemic and has been adversely impacted by the coronavirus
If you want to borrow £30,000 or more, you also need to confirm that your business wasn’t classed as a business in difficulty on 31 December 2019. - Bounce Back loans
Bounce back loans enable you to borrow between £2,000 and up to 25% of your turnover. The maximum loan available is £50,000. The government guarantees 100% of the loan and there won’t be any fees or interest to pay for the first 12 months. After 12 months the interest rate will be 2.5% a year. If you need assistance, preparing management accounts, or forecasts please contact us.
If you need any assistance, submitting furlough claims or preparing management accounts/forecasts to make loan applications please do not hesitate to contact us.
Experiencing difficulties and considering changes to your business?
If you are considering making any changes to your business, diversifying, restructuring or closing, please call us. We can help with tax planning and other strategies to help you through this difficult period.
