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Archives for Corona Virus Business Updates

After another week of turmoil and changes in Government policy…

Quite aside from how your Family Christmas plans have been affected by COVID-19 , the Chancellor has been busy trying to put stepping stones in place to support business contend with tough conditions for what seems likely to continue for some months to come

 

Coronavirus Job Retention Extended Again

In a surprise move, the Chancellor has announced that the Coronavirus Job Retention Scheme is to be further extended until 30 April 2021.

News of the extension to the scheme has come earlier than expected, as previously the Chancellor had committed to reviewing the level of support available in January 2021. In his statement made on 17th December, the Chancellor confirmed that the review had come earlier to “provide certainty to businesses so that they can plan for the remainder of the winter and New Year”.

  1. Has Anything Else changed?
  • Government have confirmed that the eligibility criteria for the scheme, the grant levels available and employer contributions all remain the same.
  • The scheme means that the government will continue to pay 80% of the salary of employees for hours not worked until 30 April 2021.
  • Employers will only be required to pay wages, National Insurance Contributions (NICS) and pensions for hours worked; and NICS and pensions for hours not worked.

 

Government Guaranteed COVID-19 Schemes

In his statement, the Chancellor also confirmed that deadlines for applying for government-guaranteed COVID-19 loan schemes (CBILS, CLBILS and BBLS) had now been extended until 31 March 2021.

The extension is to ensure that businesses can continue to access monetary support in order to grow and recover.

You are strongly advised to review your cashflow projections as soon as practicable – with commitments made to HMRC for Time to Pay arrangements and the 12 month capital repayment holidays on BBLS and CBIL rapidly approaching for some, you should re-evaluate the cash needs of your business urgently.

If you need more support, please contact us – and remember you are able to top up facilities and replace a BBL facility with a CBIL facility (although you must settle the BBL facility out of a successful CBIL application).

 

Budget 2021 Date Announced

Also within his statement, the Chancellor confirmed that Budget 2021 will take place on 3 March 2021 and will provide further information on COVID-19 support packages.

 

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Important Extensions to the Corporate Insolvency and Governance Act …

As the year draws to a close, the Government has recently announced that it will extend some temporary provisions in the Corporate Insolvency and Governance Act, as well as reinstate one that had already lapsed.

Extension of Temporary Suspension of Statutory Demands and Winding-Up Petitions

The Government announced on 9 December that it will extend the temporary suspension of statutory demands and winding-up petitions, with the suspension running until 31 March 2021. This was due to end on 31 December 2020. 

 

Extension of Temporary Suspension of Wrongful Trading

The Government also announced on 9 on 25 November, its intention to reinstate the temporary suspension of wrongful trading until 30 April 2021.

The wrongful trading suspension ended on 30 September 2020, and the new temporary suspension is effective from 26 November in England, Wales & Scotland and from 14 December 2020 in Northern Ireland.

Please note that with the Regulations having a retrospective effect, there appears to be a gap of approximately two months where wrongful trading liability for directors was not suspended. As a result, it would appear that decisions and actions taken by directors in England, Wales & Scotland during the interim period between 30 September and 26 November would be subject to the ordinary wrongful trading provisions.

Strange times indeed….

 

Virtual AGM’s

Companies and other qualifying bodies that are obligated to hold AGMs will continue to be able to hold these meetings virtually until 31 March 2021. This dispensation was due to expire on 30 December 2020.

 

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The Coronavirus Self-Employment Income Support Scheme

– Third SEISS Grant introduces “significantly reduced profits” test….

The eligibility criteria for the third SEISS grant have been further tightened, as the guidance for the third Self-employment Income Support Scheme (SEISS) grant has been published, less than one week before the portal opens for claims from 30 November 2020.

On the eve of clients preparing to make a claim, we look at what you need to be aware of.

 

  1. Do I Qualify For The Scheme?
  • You are eligible to claim if you are a self-employed individual or a member of a partnership only;
  • Subject to eligibility, the third and the fourth grants can be claimed even if previous grants were not claimed;
  • You must have been previously eligible for the first and second SEISS grants to claim for the third and fourth grants;
  • The business needs to not only be adversely affected due to coronavirus but also to
    • be currently trading but be impacted by reduced demand due to coronavirus; or
    • have been trading but be temporarily unable to do so due to coronavirus.
  • Guidance published this week now requires you to certify
    • You intend to continue to trade; and
    • reasonably believe there will be a significant reduction in your trading profits due to reduced activity, capacity or demand or inability to trade due to coronavirus

 

  1. Over What Period Am I Required To Review My Eligibility?
  • the significant reduction in trading profits test is to be applied to the accounting period as a whole;
  • For many taxpayers, for example, those that use a 31 March or 5 April accounting date, the significant reduction of trading profits will be expected to appear in the results they report on their 2020/21 tax return.
    • However, some taxpayers, for example, those that use a 30 April accounting date, will not report the trading results for the relevant period until their 2021/22 tax return.

 

  1. So What Am I Expected To Consider?
  • As the significant reduction in trading profits test applies to the tax year as a whole, you should forecast the remainder of your trading results for the year to seek to validate that you will incur a significant reduction in profits over the accounting period covering your claim;
  • Given the complexity of this process, it seems that HMRC are reliant upon an honest assessment from you although you must be aware of the possibility that any claim you make under the scheme may be retrospectively reviewed and enquired into.
  • If in doubt, please contact one of the Partners or your regular Account Manager.
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Coronavirus Job Retention Extended – The Changes From 1st November 2020

Now that the Government has provided fuller particulars of the new  Job Retention Scheme Extended there are a few points that we would like to draw to your attention.

 

  1. Who Is Eligible?
  • The CJRS as re-engineered from 1 November allows businesses to furlough and claim grants for an additional group of employees.
  • Claims for periods starting on/after 1 November 2020 can include individuals employed at 30 October 2020 provided an RTI submission has been made between 20 March 2020 and 30 October 2020 notifying at least one payment of earnings for that employee.
  • Therefore, new employees hired in late spring and summer can now be eligible for furlough grants.
  • There is no requirement for either employers or their employees to have used the scheme before to be eligible for periods from 1 November 2020.

 

  1. How Long Will Support Remain At 80%?
    • CJRS has been extended to 31 March for all parts of the UK;
    • From 1 November, the UK Government will pay 80% of employees’ usual wages for the hours not worked, up to a cap of £2,500 per month.
    • This policy will be reviewed in January for claims for February and March.

 

  1. Am I Limited To How Many Employees I Can Claim For?
    • When CJRS V2 was introduced from 1 July 2020, the maximum number of employees which could be included in a claim was limited to the maximum number the employer had ever previously claimed for in any single claim made for periods before 30 June 2020.
    • For claims under CJRS V3 this limit no longer applies. This will be useful to businesses who have taken on additional staff since 1 July, who would otherwise not have been able to furlough all their staff

 

  1. HMRC To Publish Employer Furlough Claims
    • From 1st December HMRC will be publishing employers furlough claim amounts within a 3 month window of the claim;
    • Details of where the Claim will be published are yet to be confirmed,
    • However, employees may be able to see how much has been claimed for them through their personal tax accounts.
    • The published data is likely to be removed after 12 months.
    • Further guidance on this to be published soon;

 

  1. Reduction in Claim Period
    • All claims have to be submitted by the 14th of the following month. 
    • There will then be a 14 day period where adjustments to the claim can be made

 

  1. Do I Need To Change Employment Agreements?
  • Yes, you should change the terms of employment contracts by agreement before furlough starts as this will be needed for new furlough arrangements.
  • Due to the rush to have everything in place for CJRS V3 in early November, it was possible to use retrospective agreements.
  • However, note that only those put in place up to and including 13 November 2020 can be relied on.

 

  1. What Has Changed To The Calculation Of Reference Pay?
    • For New Employees
      1. Reference pay for new employees (i.e. with a start date after 19th March) must be based on the last payroll before 30th October 2020.
      2. For monthly payrolls this may be the pay received on 30th September 2020 as many processing dates are set as the 31st October and therefore cannot be used as reference pay
  • Please note this does not affect the rule of being on an RTI on or before 30th October 2020 to be eligible for the scheme.
  • For Existing Employees
    1. If an employee’s contracted pay OR hours has increased or reduced since their last pay before 19th March the furlough calculation for November onwards has to be based upon their pay and hours worked before 19th March.
    2. This rule applies even if this means an employee is better off being furloughed
  • The employer will have to pay the associated employers NI and pension based on the pay/hours before 19th March and top their pay up to this amount for holiday;
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Coronavirus – Payment of VAT Deferred Due To Coronavirus

HMRC have now updated their guidance upon how traders should go about settling VAT that was deferred in the period between 20‌‌‌‌‌‌ March and 30‌‌‌ June 2020.

The Government has set out more particulars as to the options and how you can prepare to utilise the new VAT Deferral Payment Scheme.

 

  1. So What Are My Options?
  • If you deferred the payment of VAT owed to HMRC between 20 March and 30 June 2020, you can:
    • pay the deferred VAT in full on or before 31 March 2021, or
    • opt in to the VAT deferral new payment scheme when it launches in 2021, or
    • contact HMRC if you need more help to pay

 

  1. What Does The New Payment Scheme Allow?
  • The Scheme will allow you to:
    • pay your deferred VAT in instalments without adding interest;
    • select the number of instalments from 2 to 11 equal monthly payments;
  • So, instead of paying the full amount by the end of March 2021, you can make up to 11 smaller monthly instalments, interest-free.
  • All instalments must be paid by the end of March 2022

 

  1. Am I Eligible For The Scheme?
  • To use this Scheme you must:
    • still have deferred VAT to pay
    • be up to date with your VAT returns
    • be able to pay the deferred VAT by Direct Debit
  • If you opt in to the scheme, you can still have a time to pay arrangement for other HMRC debts and outstanding tax.

 

  1. If You Want To Opt In To The New Payment Scheme?
  • You cannot opt in yet;
  • The online opt in process will be available in early 2021;
  • You must opt in yourself, your agent cannot do this for you

 

  1. Do I Need To Be Doing Anything To Get Ready To Opt In?
  • Before opting in you must
    • create your own Government Gateway account if you don’t already have one

https://www.gov.uk/log-in-register-hmrc-online-services

  • submit any outstanding VAT returns from the last 4 yearsyou will not be able to join the scheme if you have not done so;
  • correct errors on your VAT returns as soon as possible – corrections received after 31 December 2020 may not show in your deferred VAT balance

 

  1. What If I Am Not Eligible For The New Payment Scheme?
  • You can contact HMRC to discuss the possibility of entering alternative time to pay options;

 

  1. Want To Consider Your Options?
  • Should you require any additional advice, please do not hesitate to contact one of the Partners or Jo Travis.
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Coronavirus Job Retention Extended

The Government has now set out further particulars of how the Job Retention Scheme Extended is intended to work following through to 31st March 2021 (effective from 1st November 2020)

Whilst many of the guidelines have remained the same, there have been some very important changes.  As previously, we must caution that whilst more detailed guidance is welcome, there remain uncertainties for which further clarification will be given in the coming weeks…

In the interim, we have tried to pick up some of the core detail provided in the latest announcement.

Should you want to review the latest Scheme details yourself please follow this link: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme

So What Has Changed?

  1. Who is eligible?
    • From 1st November you can furlough any current employee who was on a payroll RTI between 20th March 2020 and 30th October;
    • Employees do NOT have to have been previously furloughed
    • This means employees who were previously not eligible to be furloughed under CJRS are now eligible under CJRS Extended
    • If you are a Barrons payroll client:
      1. We are working upon updating your monthly spreadsheets to include all eligible employees;
      2. We hope to release the latest spreadsheets by Monday 16th November 2020, giving priority to weekly payroll clients first

 

  1. How Will Reference Pay Be Calculated Under CJRS Extended?
    • Employees employed on or before 19th March 2020 (who were either furloughed or not furloughed) will have their reference pay calculated as follows:
      1. For fixed pay employees, reference pay will continue to be paid based upon the last pay received on or before 19th March 2020 (same as for CJRS)
      2. For variable pay employees. reference pay will be the higher of (1) the employees average pay in tax year 19/20 and (2) the pay they received in the comparable pay period the previous year (same as for CJRS)
    • Employees employed after 19th March and on or before 30th October will have their reference pay calculated as follows:
      1. For fixed pay employees, reference pay will be based upon their last pay received on or before 30th October;
      2. For variable pay employees. reference pay will be the average pay between their start date and the day before they were furloughed

 

  1. How Much Can I Claim and What Payments Can I Claim Furlough For?
    • From 1st November 2020 until January 2021,
      1. you can claim the full 80% gross pay back through the grant;
      2. you will have to pay the associated employers NI and Pension contributions.
    • In January 2021
      1. HMRC will review the scheme again and may decide to reduce the amount the employer can claim back;

  

  1. What About Holiday Pay and Notice Pay?
    • Holiday Pay
      1. You can still claim furlough on holiday pay but you must top up the pay to full pay at your own expense;
      2. The employee must already be on a flexi furlough agreement – you cannot furlough an employee just to cover holiday;
    • Notice Pay
      1. In November you can continue to claim the furlough for notice pay;
      2. This may change from 1st December – details are due to be published at the end of November.

 

  1. When Can I Make My Claim?
    • The time limit to make a claim has been significantly reduced;
    • From 1st December, employers have ONLY until the 14th of the following month to submit a claim (where the 14th falls on a weekend the closing date will be the following working day);
    • Claims can be submitted before the claim period ends
    • If you are a Barrons payroll client:
      1. To ensure we can submit your claim on time we will need to restrict any last minute changes to the payroll;
      2. Please try to make sure the data is correct before sending it to us. 
  • It is also vital that you take the time to fill in the flexi spreadsheets we send you that help us process your payroll correctly and your subsequent claim to HMRC. 
  1. We will aim to prepare your claim for approval as soon as the payroll has been finalised;
  2. However, month end is a very busy period for us in payroll so please be patient while we prepare your claim;
  3. We will let you know when the claim has been uploaded to Iris Openspace and ask that you log in and approve as soon as possible. 

 

  1. Can I Re-Employ Someone Who Has Left or I Have Made Redundant & Then Furlough Them?
    • Yes you can, employees that were employed and on the payroll on 23rd September 2020 who were made redundant or stopped working for their employer afterwards can be re-employed and claimed for;
    • You will have to re-instate as an employee from the day after they left;
    • They will have to pay back any redundancy pay in full (but not the notice pay) and their original start date will be valid;
    • You can claim the furlough for them however the date to make a furlough claim for September has expired; for October payroll note that the Claim has to be made by 30th November. 
    • Note that you will incur the following expenses
      1. Employers NI and pension contributions;
      2. Holiday that is accrued;
  • If you decide to make them redundant again at a later date they may have reached an additional full years service or reached another birthday that may increase the redundancy pay and notice owed to them;
  1. From December 2020 HMRC may remove the ability to claim furlough on notice pay;
  2. From February 2021 HMRC may reduce the amount you can claim back through CJRS Extended
  3. Once re-employed, any future redundancy will have to be reviewed and considered again in consistency with employment law
  • If you are a Barrons payroll client:
    1. Please let Lisa Edwards know as soon as possible if you are considering re-instating an employee and placing them on furlough so that we immediately adjust your current claim. 

 

  1. And Finally – What Has Stayed The Same?
    • Furlough Arrangements
      1. From 1st November employees can be fully furloughed or flexi furloughed;
      2. When flexi furloughed an employee can work as many/few hours as required by the business in any shift pattern;
  • Employers must pay employees
    • in full for hours worked; and
    • make a furlough payment of at least 80 % of their normal pay for hours not worked – up to a cap of £2,500 per month (proportional to hours not worked);
  1. Whilst furloughed an employee must not undertake any work for the business however they can engage in training;
  2. Employers can choose to top up pay if they wish;
  3. Pay for holiday must be topped up at the expense of the employer;
  • You can claim the furlough on notice pay for November but the guidelines will change on this from 1st December 2020 (further details to be published by the end of November)
  • Furlough Agreements
    1. The decision to put an employee on fully furlough or flexi furlough must be consistent with employment, equality and discrimination laws;
    2. Must extend for at least a period of 7 calendar days;
  • Employers must discuss the agreement with the employee and confirm in writing – the Government will accept retrospective agreements for the period 1st November to 13th November;
  1. Copies of written agreements must be kept for 5 years;
  2. Records of hours worked/not worked must be kept for 6 years.
Read more

Details of enhanced time-to-pay for self assessment bills

Following the announcement of the ability to defer tax payments in July 2020, the Government has announced enhanced payment arrangements for those paying income and capital gains tax via self-assessment.

HMRC has increased the upper threshold for online applications for time-to-pay to £30,000.

 

  1. What Has Changed?
  • The Chancellor has announced enhanced payment arrangements for taxpayers unable to pay their self-assessment bill that falls due on 31 January 2021.
  • The enhanced payment arrangements applies to all tax due on that date including:
  • Deferred second payment on account for 2019/20 which was originally due on 31 July 2020;
  • Balancing payment for 2019/20 due on 31 January 2021;
  • First payment on account for 2020/21 due on 31 January 2021;
  • The amounts due can be paid in monthly instalments over a period of up to 12 months.

 

  1. Am I Eligible?
  • Taxpayers can set up a time to pay arrangement online if you meet the following requirements:
  • You have no outstanding tax returns (the 2019/20 tax return must have been filed and it must also have been processed by HMRC which can take 72 hours for a return filed online).
  • There must be no other tax debts, or HMRC payment plans set up.
  • The debt must be between £32 and £30,000;
  • Taxpayers who owe more than £30,000 or need longer than 12 months to pay may still be able to set up a time to pay arrangement by calling the self-assessment payment helpline on 0300 200 3822

 

  1. When Do I Have To Set Up The Plan?
  • The payment plan must be set up no later than 60 days after the due date of a debt e. by 1 April 2021.
  • However, to avoid late payment penalties the payment plan must be set up by the trigger date for late payment penalties which is 30 days after the due date i.e. by 2 March 2021.

 

  1. Will I Have To Pay Interest?
  • Interest will be applied to any outstanding balance from 1 February 2021;
  • This contrasts with the deferral of the second payment on account due in July 2020 on which no interest was charged;
  • No – so long as you are eligible for the Scheme;
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Coronavirus Business Interruption Loan Scheme (“CBILS”) – Further Extension to 31st January 2021

The Coronavirus Business Interruption Loan Scheme (CBILS) has again been extended, and is now due to close on 31st January 2021.

Please refer to our previous posts concerning the Scheme should you wish to research your potential to benefit from the Scheme, or alternatively follow this link:

https://www.gov.uk/guidance/apply-for-the-coronavirus-business-interruption-loan-scheme

 

  1. What is the Coronavirus Business Interruption Loan Scheme (CBILS)? 
  • CBILS is a scheme that can provide facilities of up to £5m for smaller businesses across the UK who are experiencing lost or deferred revenues, leading to disruptions to their cashflow;
  • CBILS supports a wide range of business finance products, including term loans, overdrafts, invoice finance and asset finance;
  • The government guarantees 80% of the finance to the lender and pays interest and any fees for the first 12 months, capital repayment holidays of up to 12 months are also a feature of the loans.
  • The borrower always remains 100% liable for the debt.

 

  1. Should I (Re)Consider Making An Application Before The Scheme Runs Out? 
  • You really do need to consider how the Pandemic has, and still might, affect your business
  • You should consult your current trading patterns and cash projections to monitor what is happening to your business through Lockdown II and beyond
    • You really do need to have a minimum rolling 90-day cash forecast in place to review immediate cash needs;
    • You must understand how your cash outgoings are to be managed and controlled for whatever duration this Pandemic may impact upon your business, and remember we may well be headed for a long and stressful winter as the economic recession takes its full impact upon demand.
    • And remember – whenever recovery materialises you need to take into account that as your turnover builds, your cash may deplete as often customer credit stretches beyond the need to pay employees, key suppliers and day to day running costs – the business could be moving toward recovery yet run out of cash!

 

  1. Am I Eligible? 
  • Smaller businesses (“SME”) from most sectors can apply for the facility;
  • Your business needs to be
    • UK-based in its business activity;
    • Operate with an annual turnover of no more than £45m;
  • You need to be able to demonstrate that your business was not classed as a business in difficulty on 31 December 2019

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/cbils-faqs-for-smes

 

  1. Need Help To Review Your Cash Position?
  • Please contact us urgently – time is tight already and Christmas is looming;
  • We have a dedicated team focussed upon Scheme eligibility and the application process led by jasonm@barrons-bds.com

 

  1. What If I Have Already Received a Bounce Back Loan (BBL)? 
  • You can still apply for a CBIL Loan;
  • You would need to settle the BBL Loan out of the funds generated from the CIBL.

 

  1. Is The Bounce Back Loan (BBL) Still Open Too?
  • Yes, you can still apply for a BBL Loan until 31 January 2021 currently.

 

  1. Want To Know More About CBILS?
  • You can access full information and frequently asked questions following the link below

https://www.british-business-bank.co.uk/ourpartners/coronavirus-business-interruption-loan-scheme-cbils-2/cbils-faqs-for-smes

  • Or just ring us – we will be delighted to guide you through having made numerous successful applications on behalf of clients already. 
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Chancellor extends furlough scheme & bolsters self-employment support

In a week that started with a perhaps not unexpected Government announcement introducing Lockdown II, things continued to move at a pace as Rishi Sunak announced details of a five-month extension to the current Coronavirus Job Retention Scheme.

The Self-Employment Income Support Scheme (SEISS) will also be increased, with the third grant covering November to January calculated at 80% of average trading profits, up to a maximum of £7,500.

 

  1. So What Is Changing With CJRS?
  • The Coronavirus Job Retention Scheme (CJRS) will now run until the end of March 2021, with employees receiving 80% of their current salary for hours not worked

https://www.gov.uk/government/publications/extension-to-the-coronavirus-job-retention-scheme/extension-of-the-coronavirus-job-retention-scheme

 

  1. What Has Changed Regarding CJRS?
  • Originally due to end on 31 October, the CJRS will now remain open until 31 March 2021;
  • This follows an announcement earlier in the week that the scheme had been extended to December 2020 following the announcement of a new national lockdown for England;
  • And then just a few hours later, the Chancellor justified the extension to CJRS by announcing that the clear economic effects of COVID-19 will be “much longer-lasting” for businesses than the duration of any current restrictions.
  • At this stage it seems that
    • For claim periods running “through to January 2021”, which we infer means at least to the end of December 2020 at least and most probably January 2021, employees will receive 80% of their usual salary while on furlough, subject to the original cap of £2,500;
    • Employers will be asked to continue to cover the costs of employer national insurance and pension contributions for hours not worked;
    • The CJRS extension will be reviewed in January 2020 to examine whether the economic circumstances are improving enough for employers to be asked to increase contributions;
    • HMRC will publish details of employers who make claims under the extended CJRS scheme, starting from December 2020.
  • Full guidance for the CJRS extension will be published on 10 November

 

  1. Am I Eligible To Use The New Coronavirus Job Retention Scheme?
  • Employers do not need to have used the CJRS previously;
  • You are eligible to claim irrespective of whether your business is open or closed

 

  1. Anything I Need To Keep Aware Of?
    • Employees will retain their rights at work, including SSP, annual leave, maternity and parental rights as well as a right to be paid at least the minimum wage for hours worked;
    • Employees cannot undertake any work for their employer during the hours that the employer records them as being on furlough;
    • Employers should discuss with their staff and make any changes to the employment contract by agreement; employment, equality and discrimination laws will apply in the usual way.
    • Employers must keep a written record of any agreement reached for 5 years as well as keep records of how many hours their employees work and the number of hours they are furloughed for 6 years
    • Employers must deduct and pay to HMRC Income Tax and Employee National Insurance contributions on the full amount that they pay the employee, including any scheme grant as well as pay to HMRC the Employer National Insurance contributions.

 

  1. What Employees Are Covered?
  • Core Employees
    • Employers can claim for employees who were employed and on their PAYE payroll on 30 October 2020, where the individual appeared on an employer RTI claim between 20 March 2020 and 30 October 2020;
    • Employers have the flexibility to use the scheme for employees for any amount of time or shift pattern, furloughing employees on either a full-time or part-time basis, and will be able to vary the hours worked in agreement with the employee
  • Employees Not Previously Claimed For Under CJRS
    • Employees do not need to have been furloughed under the CJRS previously;
  • Employees whose health has been affected by coronavirus or other conditions:
    • Employees can be furloughed where they are unable to work because they:
      1. are shielding in line with public health guidance (or need to stay at home with someone who is shielding)
      2. have caring responsibilities resulting from coronavirus, including employees that need to look after children
    • The CJRS is not intended for short-term sick absences;
      1. However, employers who want to furlough employees for business reasons and who are currently off sick can do so, as with other employees;
    • Furloughed employees who become ill, due to coronavirus or any other cause, must be paid at least Statutory Sick Pay (SSP) although an employer can decide to keep the employee on furlough
  • Employees re-employed by their employer:
    • Employees that were employed and on the payroll on 23 September 2020 who were made redundant or stopped working for their employer afterwards can be re-employed and claimed for;
    • The employer must have made a PAYE Real Time Information (RTI) submission to HMRC from 20 March 2020 to 23 September 2020, notifying a payment of earnings for those employees;
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COVID-19: Employees can claim a tax allowance for working from home

In the last week, the Government has updated it’s advice in relation to employees who are required to work from home as a result of COVID-19.

If you have asked your employees to work from home, and you have not reimbursed them already, your employees may be entitled to claim tax relief on additional household expenses they have incurred, such as heating and lighting.

 

  1. What Can Employees Claim?
  • Under new rules, employees can claim a £6 per week (£26 per month) allowance from 6th April 2020 where they are:
    • paid tax-free by employers; or
    • during the pandemic, employees can claim a deduction from earnings for this allowance
  • For claims pre-dating 6th April 2020, employees can claim a fixed amount of £4 per week;
  • Alternatively, employees can claim relief on the actual amounts incurred, subject to being able to provide evidence, such as phone bills.

 

  1. What Is The Allowance Intended To Cover?
  • The allowance is to cover tax-deductible additional costs that employees who are required to work from home have incurred, such as heating and lighting the workroom, and business telephone calls.

 

  1. How Does My Employee Make A Claim Against Their Tax Affairs?
  • Employees who are not reimbursed by their employer can claim this allowance as a deduction from their earnings in their tax returns (self assessment return or a postal form P87) or via the government gateway to claim tax relief in-year for 2020/21 through their personal tax code number.
  • To find out which route to use, employees are encouraged to visit HMRC’s new online claims checker.
  • It is currently understood that these rules will revert to the previous position under which the allowance is tax-free only where paid by employers when the pandemic is over.

 

  1. Can Employees Make A Claim When They Are Working Both From Home And At The Workplace?
  • HMRC has confirmed that the £6 per week/£26 per month is available in full, even if an employee splits their time between home and office
  • The employee is not required to pro-rata their claim over the number of days spent each week at home and in the office.

 

  1. Is There A Time Limit To When The Employee Can Claim?
  • Claims will not be rolled forward so, if applicable, a new claim will be needed next year.
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